The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing and to increase transparency around sustainability claims made by financial market participants. The SFDR introduces disclosure requirements for financial institutions at organisation, service and product level.
In addition to complementing the Taxonomy Regulation by requiring disclosures relating to the taxonomy alignment of certain financial products, the SFDR also requires disclosure of other sustainability related information.
The SFDR also categorises financial products according to the degree of sustainability related ambition for that product.
• Article 6 products do not pursue sustainable investment but may or may not integrate sustainability risk into the investment process. These are generally not marketed as having any sustainability credentials.
• Article 9 products (often referred to as dark green products) have sustainable investment as an objective and their underlying assets will always be in sustainable investment.
• Article 8 products sit between the other two categories and are those that promote environmental or social characteristics. They may or may not pursue sustainable investments and may invest in a wide range or underlying assets.
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