SKAGEN to reclassify equity funds as Article 8

© Mikita Karasiou

SKAGEN to reclassify equity funds as Article 8 under EU Sustainable Finance Disclosure Regulation

New categorisation as “environmental and socially promoting” funds to reflect the continued strengthening of SKAGEN’s approach to integrating sustainability into its investment process.

SKAGEN’s equity funds are to be reclassified under SFDR as Article 8 which applies “where a financial product promotes, among other characteristics, environmental or social characteristics or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices”. They were previously categorised as Article 6 which covers funds that are not promoted as having ESG factors or objectives.

The equity funds will be managed in accordance with Article 8 effective immediately with the reclassification formally taking place from 1 July 2022 when more detailed Level 2 rules and disclosure requirements of SFDR come into effect.

ESG integration enhanced

The move to Article 8 reflects the continued strengthening of SKAGEN’s approach to integrating sustainability into its investment process. There will be no changes to the current portfolios as a result of the reclassification but in future the funds will formalise and disclose how environmental and social factors are informing stock selection and subsequent decisions throughout the investment process.

We are also enhancing the integration of ESG risk analysis into our investment process, which will now be built on the following four pillars:

  1. Exclusion: All potential investments are screened and approved against the SKAGEN Sustainable Investment Policy.
  1. Enhanced due diligence for companies in high emitting industries: Any investment will be subject to an added due diligence process to identify and assess potential climate risk.
  1. ESG factsheet identifying ESG factors: Produced for each investment case and includes a dedicated ESG overview – including material ESG data, potential engagement plan and KPIs as well as a traffic light assessment of overall ESG profile.
  1. Active Ownership: Engage and collaborate with holding companies by voicing our views on how to achieve ESG improvements over time.

The result of these changes will be greater rigour in our ESG process and more detailed disclosure on how SKAGEN embeds sustainability in its investment process to achieve the best possible risk-adjusted returns for our clients.

Timothy Warrington, CEO of SKAGEN Funds, commented:

“With a long track-record of successfully integrating sustainability into our investment process and actively engaging with portfolio companies, SKAGEN is well positioned for the introduction of SFDR in Norway and abroad. Our equity funds will be categorised under Article 8, reflecting SKAGEN’s ambition to secure the financial security of clients in a way that leaves the world a better place.”


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