EU may scrap Article 9 label

The European Commission is reportedly considering scrapping the Article 9 label under the Sustainable Finance Disclosure Regulation (SFDR), after continuous criticism of how the regulation categorizes funds. The Financial Times reported that discussions between EU officials and the industry are ongoing about scrapping the label altogether.  

The European Commission is reportedly considering scrapping the Article 9 label under the Sustainable Finance Disclosure Regulation (SFDR), after continuous criticism of how the regulation categorizes funds. The Financial Times reported that discussions between EU officials and the industry are ongoing about scrapping the label altogether.  

The SFDR, introduced in 2022, was designed to help asset managers present their sustainability strategies to investors better. However, the classification of funds under the regulation has come under mounting criticism from across Europe, including a lack of guidance on how firms should name their funds. 

The EU’s parliamentary elections next year present an opportunity for the Commission to propose an amendment to the regulation as the nature of the SFDR means the Commission cannot rewrite it.  

The SFDR has also drawn comparisons with sustainability regulations in other regions, such as forthcoming anti-greenwashing rules in the UK, which have been acclaimed for setting a “higher bar” than the SFDR. France’s regulator, the Autorité des Marchés Financiers (AMF), has also criticized the regulation, calling for a benchmark under Article 8 and 9 funds with greater clarity around the inclusion and exclusion of fossil fuels. The AMF has investigated the rigour of Article 8 and 6 funds and found that differences between these particular labels are “rarely significant”. 

Read more: https://www.funds-europe.com/news/reports-commission-considering-scrapping-article-9-label