Race to Comply with SFDR and Taxonomy Rules

The sustainable investment landscape is set to be redefined by the Sustainable Finance Disclosure Regulation (SFDR) and the EU taxonomy. The report includes insights from asset managers to understand the level of preparedness towards the new EU rules. Caution over low-alignment and degree of alignment has led many to evaluate ways to upgrade Article 6 and 8 funds. The most significant challenges include overall data infrastructure, compounded by in-house bandwidth, lack of end-to-end market solutions, and regulator ambiguity. While difficult in the near term, managers will use these regulations to enhance multi-dimensional ESG integration, bolster investor perception, build granular data sets, strengthen ESG monitoring and improve engagement.