business
EU Council Sets 20 % Green-Capex Rule for Transition Funds in SFDR Revision
On June 24 the Council of the European Union removed an exclusion that would have barred companies expanding fossil fuel activities from the transition category under revised sustainable finance rules. The change sets conditions based on 20 percent taxonomy-aligned capital expenditure and operational emissions cuts.
Jul 4, 8:59 AM·2m read1 source
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The Council of the European Union on June 24 adopted its negotiating position on a revision of the Sustainable Finance Disclosure Regulation, removing the exclusion that would have kept companies expanding fossil fuel activities out of the transition category.
Forbes reported that under the Council's proposal a company can qualify for a transition label if around 20 percent of its capital expenditure aligns with the EU taxonomy of green activities and it adopts a time-bound plan to reduce operational emissions covering only Scope 1 and Scope 2.
The European Commission's original proposal would have excluded such companies entirely.
The revision creates three new product categories: sustainable, transition, and ESG basics. SFDR was established in 2011 to steer capital toward the low-carbon transition and reduce greenwashing. Global clean energy investment is projected to reach around $2.2 trillion in 2026, nearly double the amount flowing into fossil fuels, according to the International Energy Agency.
Oil and gas companies account for less than 5 percent of global clean energy spending. Europe's sustainably labeled fund market is worth around €10 trillion. Between January and June 2026 TotalEnergies held around 35 meetings with members of the European Parliament, several referencing SFDR.
The company's strategy targets putting 20 percent of its portfolio into power and low-carbon energy by 2030. TotalEnergies has invested more than €20 billion in low-carbon energy worldwide since 2020, including €4 billion in France, and reported 32 gigawatts of installed renewable capacity producing 50 terawatt-hours of electricity in 2025.
