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“Sustainable” savings under the impact of a regulatory tsunami


Since March 2021 and the entry into force of the first level of the Sustainable Finance Disclosure Regulation (SFDR), the world of “sustainable” finance has been facing a regulatory tsunami from the European Union (EU). The stakes are high for Brussels, which wants to ensure that European financial systems support the transition of companies towards sustainability.

The scope of these texts is not always obvious to savers. But things changed this summer with the entry into force of a new obligation affecting insurance distributors, investment service providers and, soon, financial advisers: they must take savers’ preferences into account. in terms of sustainability.

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“Sustainability is now a systematic subject that occurs at all levels of the management value chain, from the creation of products to their sale, including the drafting of prospectuses and reports. [rapports] and, of course, fund management”, says Clémence Humeau, head of responsible investment coordination and governance at Axa Investment Managers. To understand the magnitude of the change underway in the world of asset management, you should know that this regulatory framework is based on three main texts.

SFDR categories

The first text in this arsenal is the SFDR regulations. Since 2021, management companies must in particular categorize their products according to their ESG (environmental, social and governance) approach. This is going crescendo: funds under article 6 are not sustainable products, “article 8” funds promote environmental or social criteria, “article 9” funds display a sustainability objective. According to the Morningstar performance barometer, articles 8 and 9 funds represented, at the end of 2021, no less than 42% of the funds marketed in the EU, with the article 8 category being largely predominant.

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Please note that this is not a label, because the companies themselves decide to allocate their funds to a category. However, there are obligations in terms of information. “From 1er January 2023, we are going to have to adapt the fund prospectuses and reports by adding standardized information of about fifteen pages on the consideration of sustainability issues for article 8 and 9 funds under the SFDR”says Humeau. This will take the form of answers to questions such as: “Does this financial product have a sustainable investment objective? “To what extent do the sustainable investments of this fund have an environmental objective? “, etc.

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