The new EU Sustainable Finance Disclosure Regulation came into effect 10 March 2021. This regulation is applicable to European financial market participants, ranging from asset managers to financial advisors, and aims to increase transparency regarding ESG-focused products. It forces asset managers to reveal the differing levels of sustainability integration and focus of each investment strategy they offer.
Under the new classifications, products are labelled as either Article 6, 8 or 9 under SFDR.
- Article 6 funds do not integrate any kind of sustainability considerations into the investment process.
- Article 8 funds promote environmental, social and governance characteristics.
- Article 9 funds have sustainable investment as their objective.