Useful information for investors in sustainable investment funds
Based on standards developed by investors and in light of the recent European regulatory framework on sustainable finance (the Sustainable Finance Disclosure Regulation, SFDR), sustainable funds can be divided into two main categories. Each category is subject to specific disclosure requirements designed to protect investors.
The first category includes financial products that promote environmental and/or social characteristics (also known as 'light green' or 'Article 8' products). These are funds that adopt some form of sustainability strategy when selecting securities for their portfolio.
An example might be an investment fund that invests in companies with the highest ESG scores in environmental matters. Such a fund must clearly disclose, for example in the Key Information Document (KID), how it takes environmental sustainability into account when choosing the securities it invests in.
The second category consists of financial products with explicit sustainable environmental or social objectives (also known as 'dark green' or 'Article 9' products).
An example would be a fund that invests in projects or companies with greenhouse gas emissions reduction targets aligned with the Paris Agreement. In this case, the fund must provide detailed information about its objectives (such as those covered by the Green Taxonomy and specify precise quantitative indicators to track the progress and achievement of these goals.
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