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UN Sustainable Development Goals
In September 2015, the UN Member States adopted the 2030 Agenda for Sustainable Development ("Transforming our World").
The Goals and targets will stimulate action over the next fifteen years in areas of critical importance for humanity and the planet:
To end poverty and hunger, in all their forms and dimensions, and to ensure that all human beings can fulfil their potential in dignity and equality and in a healthy environment.
Protect the planet from degradation, including through sustainable consumption and production, sustainably managing its natural resources and taking urgent action on climate change, so that it can support the needs of the present and future generations.
Focus on ensuring that all human beings can enjoy prosperous and fulfilling lives and that economic, social and technological progress occurs in harmony with nature.
Foster peaceful, just and inclusive societies which are free from fear and violence. There can be no sustainable development without peace and no peace without sustainable development.
The 17 Sustainable Development Goals are interlinked and integrated and the partnerships and collaboration across all of the goals are of crucial importance in ensuring that the purpose of the new Agenda is realised.
Within the 2030 Agenda are 17 Sustainable Development Goals (SDGs) (divided into 169 sub-targets).
Sustainable Finance Disclosure Regulations (SFDR)
These European Regulations were introduced to improve disclosure, transparency and reporting in relation to funds, investments and companies that self reported as having high Environmental, Social and Governance (ESG) principles.
From 1 January 2022, certain Taxonomy Regulation related disclosures will apply to funds under Articles 8 and 9 SFDR that make sustainable investments with environmental objectives in accordance with the EU taxonomy. This subset of Article 8 and 9 SFDR funds are subject to additional disclosure requirements regarding the alignment of their investments with the Taxonomy Regulation.
Further, under the Taxonomy Regulation (Article 7), so-called Article 6 SFDR funds are required to include a negative statement in their prospectuses and annual reports that the underlying investments of the fund do not consider the EU criteria for environmentally sustainable economic activities.
Although investments are currently self reporting under the SFDR regulations it is hoped that a precedence has been set with oversight of such reporting due soon to ensure the accuracy of the classifications.
Products with no ESG characteristics or claims in their product literature.
Products managed using basic ESG integration (i.e., ESG risk management).
Products whose managers are considering the adverse impacts of their investment decisions on sustainability.
Product-level screening that is necessary to comply with national legal requirements.
Products making vague statements about ESG considerations they may override or disapply on a discretionary basis.
Products that are subject to an approach at a manager level but which is not promoted in in product level documentation.
Products making activism, engagement or other stewardship claims that do not speak specifically to environmental or social matters.
Products that target companies with good governance but do not reference environmental or social matters.
Article 8 “Light Green Funds”, in addition to requirements of Article 6:
Traditional investment method combined with (voluntary) screening promoted at portfolio level which is referenced in product literature.
Traditional investment objective and investment policy which refers to environmental or social considerations (other than ESG risk) such as Environmental and Social opportunities, impact investing, or best in class environmental or social performance.
Traditional investment objective that includes a reference to achieving a return through a sustainable/ environmental & social/ green portfolio.
Products that do not themselves have an environmental or social objective, but they state that they invest in something else that does.
Article 9 “Dark Green Funds”, in addition to requirements of Articles 6 & 8:
A product whose investment objective states the product is seeking to invest sustainability, as well as generate an investment return.
A product that targets environmental or social outcomes or prioritises environmental or social investments ahead of investment returns.
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