SFDR Insight

SFDR DEEP DIVE

How SFDR Principal Adverse Risk Indicators are influencing Fund Strategy

Over the last two years, the European Commission has introduced some of the most stringent corporate environmental, social and governance (ESG)-related reporting requirements to be imposed on businesses.

One mandate in particular, the Sustainable Finance Disclosure Regulation (SFDR), which took effect in March of 2021, ushered in a new era of ESG reporting in the European Union (EU) that imposes dozens of public disclosure requirements on manufacturers and marketers of financial products with the goal of improving transparency in the market for sustainable investment products.

In order to provide a more detailed look at the sustainable fund marketplace since the implementation of the SFDR Level 2 RTS, we used SFDR Reporting Professional, powered by Clarity AI to analyse detailed trends in PAI disclosure and performance across a total of 27,000 EU funds covering Category 6, 8 and 9.

The analysis finds:

99%

of Article 9 funds consider PAI's

in their investment strategy

96%

of Article 8 funds consider PAI's

in their investment strategy

30%

of Article 6 funds consider PAI's in

their investment strategy

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LSEG SFDR Reporting Professional powered by Clarity AI allows you to create ready-to-use SFDR reports at scale. Discover more about how we can help you report on PAI indicators for your portfolios and funds.