Sustainable Finance Disclosure Regulation - what are articles 6, 8 and 9?
The EU's new Sustainable Finance Discolusre Regulation (SFDR) was introduced in March 2021. An amendment will come into force in January 2023. Most importantly, the SFDR classifies funds into three different categories, under Articles 6, 8 and 9 of the SFDR.
The SFDR primarily combats greenwashing and seeks to bring more transparency to the world of sustainable investments.
In doing so, it mandates that funds must be classified into one of three categories, either Article 6, Article 8 or Article 9.
Article 6 funds are those that do not have specific ESG characteristics, meaning they are classified as non-sustainable. For example, these may invest in companies involved in tobacco or fossil fuel businesses. Such funds must be clearly labeled as non-sustainable by providers in order to be allowed to be offered.
Article 8 funds are those where some characteristics of ESG occur. For example, in the E for Environment, the S for Social, or the G for Governance.
Article 9 funds are funds with specifically sustainable products that perform exceptionally well in the ESG area and whose goal is sustainable investing.
This change will make it difficult for conventional, non-sustainable products in particular to maintain their market value due to the clear labeling.
It also gives particularly sustainable products the chance to be recognized more easily. This will probably lead to an increased demand for these products in the future.
Sustainable investments are thus becoming more and more lucrative. A good reason to take a closer look at them. You will find a lot of information and regular articles on our website.
In our GGX Finder you can specifically filter for article 8- and 9-funds.
About the author
Mauro Baumann is an apprentice at St.Galler Kantonalbank and completed an internship at Global Green Xchange as part of the KV4.0 practical year. He became interested in the world of investments early on with an interest that will probably never be exhausted.