Sustainability: SFDR Reform: Council's Final Negotiating Position

Research evidence excerpt

Sustainability: SFDR Reform: Council's Final Negotiating Position

UpdateM In our

conversations,

Approach (a)

investors have

remains.

mainly focused

Approach (b)

One of the on approaches

has been

approaches (a) (a) and (b).

modified to

to meet 70% These

reference at

alignment is by In addition to requirements

least two

investing in the have already

sustainability

assets that Commission's been an area of

indicators over

outperform the proposal, they concern, as they

just one.

ESG Basics (A8) average rating should also be may create

Integrates

Investment of the prohibited from reclassification

approach c) into

Universe investment investing in risk. Tightening

approach e) by

universe or the securities with the criteria by

making

reference ESG ratings in requiring two

approach e) less

benchmark. For the bottom 20% indicators rather

open-ended and

other in their universe. than one under

giving

approaches see approach (b),

preference to

Appendix below and making

ESG improvers

the table. approach (e)

criteria under

less open-

now previous

ended, could

approach c).

intensify this

risk

Our investor

conversations

have so far

indicated limited

appetite to

In addition to categorise

the funds as A7,

Allow only A7

Commission's though this may

General Purpose funds to invest

proposal, change with the

Sovereign in general-

require funds additional

Bonds do not purpose public

investing in flexibilities

count towards sector bonds

Sovereign sovereign bonds introduced.

70% threshold from Union-

Bonds in any While the A7

for Transition established

categories to do flexibilities will

(A7) and public sector

so in alignment likely be

Sustainable (A9) bodies, limited

of sustainability welcomed, we

categories. to 15% of the

objective or expect concerns

portfolio.

strategy of the around meeting