Sustainable Finance and the end of greenwashing?

The brand new EU Sustainable Finance Disclosure Regulation (SFDR) got here into pressure simply over one week in the past with the goal of getting rid of “greenwashing”. Funding funds with sustainable credentials are more and more in demand, resulting in trade issues that some managers could declare their funds are extra “inexperienced” than they are surely. The SFDR seems to be to cast off this, with disclosures surrounding sustainability required for in-scope corporations. SFDR is a part of a package deal of EU rules broadly designed to assist the redirection of capital into extra sustainable companies.

At this time I joined a panel of funding managers on the Actual Offers ESG and Funding Administration convention to debate implementation plans and pains for the SFDR. We coated numerous factors together with the variations (and parallels) between Article 8 “gentle inexperienced” and Article 9 “darkish inexperienced” funding merchandise.

The SFDR is just not solely of relevance to the corporations which can be straight caught by it. There is no such thing as a doubt that corporations looking for funding will look to reveal that they represent potential “sustainable investments” for inexperienced funds, as a part of which they might want to make sure that their practices don’t considerably hurt any of the environmental or social goals set down by SFDR.

This “do no important hurt” precept shall be a difficult one for investee corporations to beat, however essential in the event that they want to entice funding from the “greenest of inexperienced” Article 9 funds and Article 8 “mid inexperienced” funds pursuing sustainable investments. Will probably be attention-grabbing to see how the SFDR implementation progresses and the way the market will adapt as sustainable funding turns into ever extra essential.

The SFDR is just not solely of relevance to the corporations which can be straight caught by it. There is no such thing as a doubt that corporations seeking to entice funding could take into consideration how they’ll reveal that they represent potential “sustainable investments” for inexperienced funds…