Following arXiv:1907.04737, we continue our investigation of the relation between the renormalizability (with finitely many couplings) and integrability in 2d σ-models. We focus on the "λ-model," an integrable model associated to a group or symmetric space and containing as special limits a (gauged) WZW model and an "interpolating model" for non-abelian duality. The parameters are the WZ level k and the coupling λ, and the fields are g, valued in a group G, and a 2d vector A ± in the corresponding algebra. We formulate the λ-model as a σ-model on an extended G×G×G configuration space (g, h,h), defining h andh byOur central observation is that the model on this extended configuration space is renormalizable without any deformation, with only λ running. This is in contrast to the standard σ-model found by integrating out A ± , whose 2-loop renormalizability is only obtained after the addition of specific finite local counterterms, resulting in a quantum deformation of the target space geometry. We compute the 2-loop β-function of the λ-model for general group and symmetric spaces, and illustrate our results on the examples of SU (2)/U (1) and SU (2). Similar conclusions apply in the non-abelian dual limit implying that non-abelian duality commutes with the RG flow. We also find the 2-loop β-function of a "squashed" principal chiral model. 1 bhoare@ethz.ch 2 n.levine17@imperial.ac.uk 3 Also at the Institute of Theoretical and Mathematical Physics, MSU and Lebedev Institute, Moscow. tseytlin@imperial.ac.uk 1 Our notation and conventions are summarized in Appendix A. In particular, we use hermitian generators T a of the Lie algebra so that if g = e v ∈ G then v = i T a v a ∈ Lie(G) is anti-hermitian. The action is defined as S = 1 4π d 2 σL so that L has extra factor of 2 compared to the "conventional" normalization.