Raising the bar: SFDR to lead to 'uptick in name and strategy changes' as firms adapt

New ESG regulation comes into effect

The Sustainable Finance Disclosure Regulation (SFDR) that came into effect in the European Union last week is expected to cause asset managers to adapt their existing ESG strategies to comply with the new requirements and avoid being tarred with the 'greenwashing' brush.

The level one disclosure requirements under the SFDR, which came into force on 10 March, will see asset managers reporting on how they manage sustainability risks, substantiating the ESG credentials of their products and disclosing the principle adverse impact (PAIs) their investments have on sustainability. The changes have been welcomed as a 'game changer' by industry participants, with Morningstar saying the new rules "raise the bar for funds declaring themselves 'green'" and expecting to see "behavioural change for investment firms" as a result. Sustainable finance: The bright spo...