Unlocking a Greener Future with Article 6, 8, and 9 Funds
Sustainable finance is a pivotal driver in reshaping our global economic landscape and redirecting capital flows towards environmentally responsible and socially inclusive projects.
It plays a vital role in addressing the pressing challenges of climate change, environmental degradation, and social inequality. Sustainable Finance Disclosure Regulations Level 1 was introduced in March 2021. Its most visible and impactful element was the classification of funds into three categories – Articles 6, 8 and 9 of the SFDR.
- Article 6 Funds: those that do not promote their environmental social or governance (ESG) characteristics.
- Article 8 Funds: where a financial product promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.
- Article 9 Funds: where a financial product has sustainable investment as its objective.
Sustainable finance, classified by Article 6, 8, and 9 funds, represents a significant shift towards a greener, more equitable future. These mechanisms not only drive investments in clean and sustainable technologies but also prioritise the welfare of the most vulnerable populations.
By promoting responsible financial practices and fostering global cooperation, they help create a world that is better prepared to address the pressing challenges of our time.