“Happy SFDR day to those who celebrate,” said a wag on Twitter as the EU’s SDFR came into force. The fund industry has had to embark on this ambitious path without clear guidance of the rules and how these will be enforced. 

The good news is that regulators and rule makers appear to recognise the difficulty of the task. “It can never be assured that all market participants and respective competent authorities in the EU will have the same interpretation of the regulation, and apply the same set of criteria,” said Paul Wilwertz, head of communication with the CSSF, talking to investmentofficer.lu. 

“This is a lot of legislation,” admitted financial services European commissioner Mairead McGuinness.

Given the uncertainty, it appears that asset managers are tending to allocate funds either to the SFDR’s non-impact, sustainable category (article 8) or rank funds as clearly non-sustainable (article 6). Labelling them as explicitly sustainable investment strategies (article 9 or impact funds) is a more complex step.

“We are in a transition phase and we should convert the vast majority of our range to article 8 before mid-2022,” Laurent Simeoni, head of portfolio management at ING Luxembourg told Investment Officer.