Following this reclassification, Columbia Threadneedle now has 24 funds that are classified as article 8 funds and four article 9 funds, with 84% of assets under management in the Sicav (société d’investissement à capital variable, or investment company with variable capital) classified as either article 8 or article 9 financial products.
Under the European Union’s Sustainable Finance Disclosure Regulation (SFDR), article 8 funds are meant to promote environmental and/or social characteristics, while article 9 funds have a sustainable investment objective.
“Since the introduction of the EU Sustainable Finance Disclosure Regulation (SFDR) in 2021, our priority has been to build on our responsible investment capabilities, while adapting our product range to the new rules,” said Florian Uleer, head of EMEA wholesale at Columbia Threadneedle, in a press release. “We are pleased to add eight funds to article 8 and two funds to article 9 to our existing offering with over 80% of our AUM in our Luxembourg Sicav range now classified as either article 8 or 9 funds. We believe this creates more choice of investments for our clients.”
The two funds being reclassified as article 9 funds are the CT (Lux) European Social Bond, which aims to support socially beneficial activities and development mainly in Europe, and the CT (Lux) Sustainable Outcomes Global Equity fund, which invests in companies that deliver positive sustainable outcomes for the environment and/or society, and have ESG practices in line with themes such as good health and well-being, reduced inequalities, decent work and economic growth, sustainable cities and communities, quality education, affordable and clean energy, industry innovation and infrastructure, and responsible consumption and production.
These funds will be explicitly committed to investing at least 80% of their total assets in sustainable investments, noted Columbia Threadneedle’s press release.
Fund research firm Morningstar found that 307 funds classified as article 9 were downgraded in the fourth quarter of 2022. Fintech company Trackinsight, earlier this year, noted that article 9 exchange-traded funds (ETFs) were being downgraded by assets managers partly due to evolving regulation and lack of clarity on sustainability criteria.
In September 2023, the European Commission launched two consultations around the SFDR, with the aim of revising the regulation and addressing challenges faced by the fund industry.