Get familiar with the EU regulations

SFDR Fund Categories: Article 6, 8 and 9

SFDR (Sustainable Finance Disclosure Regulation) is an EU regulation that came into effect in March 2021. The purpose is to:

• Increase transparency around sustainability aspects in financial products
• Give investors better opportunity to compare products based on sustainability criteria
• Prevent "greenwashing" by requiring standardized information
• Redirect capital toward more sustainable investments to support the EU's green transition

The regulation is a central part of the EU's action plan for sustainable finance and works together with other regulations such as the EU taxonomy to create a more sustainable financial system.

Article 8 - "Light Green" funds

Definition: Funds that promote environmental and/or social characteristics.

Disclosure requirements: - Must disclose how the environmental or social characteristics are met - Must describe how sustainability risks are integrated into investment decisions - Must publish information on sustainability factors in periodic reports

Investment strategy: - Promotes environmental or social characteristics, but does not have sustainable investment as its main objective - Can invest in companies with good governance practices - Must follow certain ESG criteria

Transparency: - Must publish information on websites and in pre-contractual documents - Must describe how they promote environmental or social characteristics

Why SFDR is Important for You as an Investor

As an investor, SFDR (Sustainable Finance Disclosure Regulation) provides you with valuable benefits that strengthen your investment decisions:

Transparency: SFDR ensures that you receive clear information about how your investments impact the environment and society. No more guesswork about how "green" your investments really are.

Comparability: With standardized categories (Article 6, 8, and 9), you can easily compare different investment products across providers and choose the level of sustainability that matches your values.

Protection against greenwashing: SFDR's strict disclosure requirements reduce the risk of financial products appearing more sustainable than they actually are. You can make decisions based on facts rather than marketing.

Risk management: By requiring information about sustainability risks, SFDR helps you identify investments that may be vulnerable to climate change, social conflicts, or poor corporate governance.

Value alignment: SFDR makes it easier to invest in accordance with your personal values and sustainability goals, whether you want to focus on environmental issues, social matters, or both. With SFDR, you as an investor gain better tools to make informed decisions that can not only provide financial returns but also positive effects for the planet and society.