Sustainable Finance Disclosure Regulation – what you need to know
The EU Sustainable Finance Disclosure Regulation (SFDR) imposes new transparency obligations and periodic reporting requirements on EU portfolio managers to disclose how environmental, social and corporate governance (ESG) considerations are incorporated within their investment practices at both a product and portfolio management level. The aim of the regulation is to put more clarity on environmental and social aspects but also to standardize the reporting that will enable customers to consciously decide on products they invest in.
The Sustainable Finance Disclosure Regulation classifies financial products as either Article 6, 8 or 9;
- Article 6 covers products which do not integrate sustainability into the investment process
- Article 8 applies to products which promote environmental and/or social characteristics and may invest in sustainable investments
- Article 9 covers products which have sustainable investments as their objective