Broad ESG funds lose out to ‘greener’ vehicles in Europe
Investors in Europe are deserting funds that align with broad environmental, social and governance principles, but vehicles that target specific “sustainable” investment goals are seeing positive inflows, data show.
In the nine months to the end of September mutual and exchange funds classified as Article 9 products under the EU’s Sustainable Finance Disclosure Regulation had net inflows of €32.8bn, while Article 8 products had outflows of €173bn, research from Refinitiv Lipper shows.
Article 8 funds, sometimes dubbed “light green”, have to show they generally promote environmental or social characteristics. In contrast, Article 9 funds target a sustainable outcome as a specific objective.
“At the moment, it remains very vague how the EU taxonomy principles may be applied to investments. Investee companies often struggle with unclear eligible activity breakdowns and the data coverage remains low, especially for smaller firms that don’t have the expertise or capacity for related disclosures,” said Kamil Sudiyarov, product manager with fund manager VanEck.
He said VanEck had consequently decided not to take up the option of indicating the degree of EU taxonomy alignment achieved by its environmentally sustainable Article 9 funds — “even those that were designed with the goals of the EU taxonomy in mind”.
This story originally appeared on: Financial Times - Author:Emma Boyde
