Funds subject to higher standards of disclosure under the SFDR currently represent up to 21% of total European funds and up to 25% of total European fund assets, research from Morningstar shows.
In a client presentation, JP Morgan said it had "opted for a prudent approach" where only existing sustainable funds would be classified as Article 8 or Article 9.
"There will be an effort to uplift additional products to be classified as Article 8 and/or Article 9 in the coming months," it added.
DWS, UBS, Schroders, and Aviva, have shared similar plans.
Morningstar said there was pressure from "some distributors and fund buyers" that have said they would "only consider funds in Article 8 and 9 categories going forward".
Article 8 refers to financial products that promote "among other characteristics, environmental or social characteristics", provided that companies in which the investments are made follow good governance practices.
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Some Article 8 products promote sustainability characteristics by only applying exclusions. This is the case for passive exclusions-only products such as LGIM's and BlackRock's ranges of ESG-screened ETFs.
Many Article 8 funds have explicit binding constraints such as portfolio-level ESG key performance indicators. They must, for example, achieve a higher aggregate ESG score or lower carbon intensity than their benchmark.
This type of ESG-integrated approach is adopted by funds offered by Amundi, BNP Paribas, Robeco, and Unigestion, among others. These are funds typically not branded as ESG.
Article 9 refers to financial products that have a "sustainable investment objective". These are what asset managers consider "dark green".
They invest in companies with products and services that are deemed to contribute positively to environmental and social challenges, while making sure the companies don't do significant harm and do follow good governance practices.
Article 8 products currently comprise a much larger portion of the ESG product universe than Article 9 products (approximately 90% versus 10%).
