EU SFDR and Taxonomy
EU Sustainable Financial Disclosure Regulation (SFDR)
The new EU Sustainable Finance Disclosure Framework or SFDR defines the transparency requirements on financial products’ sustainability characteristics. It is part of the EU Commission’s Action Plan on financing sustainable growth initiated in March 2018. The SFDR aims to provide greater transparency on the degree of sustainability of financial products. It targets to promote the flow of private investments into sustainable development areas whilst preventing green washing.
Primarily, SFDR requires to disclose on the following key elements:
i. Consideration of sustainability risks that are risks of loss of value of underlying assets due to environmental or social events;
ii. investments in economic activities that contribute to environmental or social objectives,
iii. including EU-taxonomy eligible economic activities; consideration of principal adverse impacts on environmental and social factors resulting from an investment decision.
The SFDR implements a three-tier categorisation of financial products:
▪ Financial products with the objective of sustainable investments or Article 9 products This is considered the “top tier”, where the objective of the financial product relates to a sustainability objective or impact.
▪ Financial products promoting environmental or social characteristics or Article 8 products. These are considered the “middle tier”, where sustainable investment is not the objective of the product, but sustainability remains an important and binding aspect of the investment process.
▪ Other financial products or Article 6. This is considered the “bottom tier”, where sustainability is not the objective of the product and is not a mandatory part of the investment process (although sustainability may still be part of the investment manager’s processes in a softer way, such as taking account of sustainability risks).
SFDR Classification of our Strategies
Based on Thematics Asset Management’s interpretation of the regulation, it has classified its thematic strategies as follows:
|Thematics AAA European Selection Fund||Art.8|
|Thematics AI and Robotics Fund||Art.8|
|Thematics Safety Fund||Art.9|
|Thematics Subscription Economy Fund||Art.8|
|Thematics Water Fund||Art.9|
|Thematics Wellness Fund||Art.9|
|Thematics Climate Selection Fund||Art.8|
|Thematics Meta Fund||Art.8|
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