Morningstar provides a brief update on Article 8 and 9 funds (SFDR) as per 26 October, 2022:
The market share of Article 8 and Article 9 fund assets continued to increase and reached 53.5% at the end of September.
Over 380 products changed SFDR status in the last quarter. The vast majority were upgraded to Article 8 from 6, but 41 were downgraded to Article 8 from 9, and more are expected to follow suit in the coming months.
While nearly all (95%) of Article 8 and Article 9 funds report considering PAIs, still less than half (48%) disclose a minimum percentage of sustainable investments, and just one third report a minimum percentage of taxonomy-aligned investments.
Less than 5% of Article 9 funds target sustainable-investment exposure between 90% and 100%, and only 26 funds aim for a 100% allocation to sustainable investment, raising questions about the feasibility of some new regulatory guidance.
Of the Article 8 and Article 9 products that report taxonomy alignment, 85% provide 0% values, while a mere 2% of Article 9 funds target exposure to taxonomy-aligned investments higher than 10%.
Climate funds and biodiversity funds
While general ESG- and sustainability-focused offerings continued to account for the largest part of the product development activity, climate funds remained by far the most popular theme represented among new product launches. Thirty-four new funds with a climate flavor came to market 3 , spanning all climate investment approaches.
A record of four strategies launched with a focus on biodiversity, including Fidelity Sustainable Biodiversity Fund, HSBC World ESG Biodiversity Screened Equity ETF, BNP Paribas Easy ESG Eurozone Biodiversity Leaders PAB, and AXA IM ACT Biodiversity Equity Fund. The latter is a United Nations Sustainable Development Goals-aligned strategy primarily focused on companies offering solutions that address biodiversity loss, such as pollution on land and water, land degradation, fauna and flora protection, desertification, and overconsumption.
Source: Morningstar, more details on this report presented here.
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