The Article 9 label under the SFDR could be scrapped, according to reports.
The European Commission is believed to be scrutinising the future of the label after criticisms have continually been raised about the regulation and how it categorises funds.
According to The Financial Times, discussions are ongoing between EU officials and the industry about scrapping the label altogether.
The nature of the SFDR means the Commission cannot rewrite this legislation but can propose an amendment after the EU’s parliamentary elections next year.
Introduced in 2022, the SFDR was designed for asset managers to better present their strategies to investors with sustainability in mind. However, the SFDR – and how funds are classified under it – has come under mounting criticism from across Europe.
In February, the European Fund and Asset Management Association (Efama) criticised the European Securities and Markets Authority (Esma) for a lack of guidance on how firms should name their funds.
Comparisons have also been drawn with other regions around how they approach sustainability regulation. In particular, forthcoming anti-greenwashing rules in the UK have been acclaimed as setting a “higher bar” than the SFDR which has “arguably looser criteria”.
France’s regulator, the Autorité des Marchés Financiers (AMF), has become a particularly vocal critic of the SFDR in recent months. In February, the French watchdog called on Esma to create a benchmark under Article 8 and 9 funds, with greater clarity around the inclusion and exclusion of fossil fuels.
Going further, the AMF has also investigated the rigour of Article 8 and 6 funds and found that differences between these particular labels are “rarely significant”.
© 2023 funds europe
