Article 6, 8 and 9 funds
Article 6, 8 and 9 funds are the three classifications that are applied to all investment products sold within the EU under the EU’s Sustainable Finance Disclosure Regulation, in effect since 2022. They compel asset managers to reveal the differing levels of sustainability integration that an investment strategy contains. The regulation aims to create a more transparent playing field, partly to prevent greenwashing – where some financial firms claim that their products are sustainable when they are not.
The regulation aims to create a more transparent playing field, partly to prevent greenwashing – where some financial firms claim that their products are sustainable when they are not. This bodes well for Robeco’s suite of strategies that have embraced sustainability for decades and can now be appropriately labeled as such.
Under the new classifications, a strategy will labeled under either Article 6, 8 or 9 of the SFDR:
Article 6 covers funds which do not integrate any kind of sustainability into the investment process and could include stocks currently excluded by ESG funds such as tobacco companies or thermal coal producers. While these will be allowed to continue to be sold in the EU, provided they are clearly labelled as non-sustainable, they may face considerable marketing difficulties when matched against more sustainable funds.
Article 8, also known as ‘environmental and socially promoting’, 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.”
Article 9, also known as ‘products targeting sustainable investments’, covers products targeting bespoke sustainable investments and applies “… where a financial product has sustainable investment as its objective and an index has been designated as a reference benchmark.”
The vast majority of investment funds at Robeco are classified as Article 8. These form part of our Sustainability Inside range, which has ESG integrated as standard, and the Sustainability Focused range, which has more specific targets, such as achieving a lower carbon footprint than the benchmark.
Many of Robeco’s Towards Impact range are classified as Article 9. These include bespoke funds targeting specific sustainability themes such as Smart Energy, which focuses on companies offering renewable energy and energy transition solutions. All are branded as RobecoSAM.
Only a handful of funds fall under the Article 6 classification. These are those that cannot realistically include ESG factors, such as those that rely on derivatives, or cash savings accounts.