There are reports that the European Commission is considering scrapping its dark green Article 9 label for funds under the Sustainable Finance Disclosure Requirement amid increasing criticism among asset managers and growing fears of greenwashing.
According to Financial Times article, discussions between European Union officials and the asset management community are ongoing with the Commission now debating whether to bin the Article 9 funds.
Introduced in 2021, Article 8 funds must declare that they take social and/or environmental criteria into account.
Article 9 funds are more stringent and must present a sustainable investment objective, contributing to an environmental or social objective, without causing significant harm to other environmental or social objectives.
In February, the European Fund and Asset Management Association (Efama) criticised the European Securities and Markets Authority (Esma) for a lack of guidance on how firms should name their funds.
France’s regulator, the Autorité des Marchés Financiers (AMF), has become a particularly vocal critic of the SFDR in recent months.
Two months ago, the French watchdog called on Esma to create a benchmark under Article 8 and 9 funds, with greater clarity around the inclusion and exclusion of fossil fuels.
It has also investigated the rigour of Article 8 and 6 funds and found that differences between these
Fund managers have also voiced their concerns, asking for clarity on what the Commission defines as ‘sustainable investing.
Asset managers including BNP Paribas, BlackRock, Amundi and Pictet have removed the label from €175bn of funds in just over three months to January, reducing the size of the market by nearly 40%.
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