Article 9

Luxembourg is by far the leading EU domicile for environmental funds, according to a new report by PwC. Assets under management in green funds in the Grand Duchy are greater than the combined totals of the next three largest domiciles for these products. This article explains why this might be so.

It is very difficult to apply ESG criteria consistently to purely passive investments. Active investments lend themselves much better to this. It is easier to apply an integration approach that goes beyond exclusions in active management. In the end, it is all about the client’s profile, which has to match the risk/reward profile of a fund or strategy and the client’s sustainability preferences. 

Not all European regulations are good. Under the Sustainable Finance Disclosure Regulation (SFDR), part of the EU Green Deal, asset managers must disclose information on sustainability. The objective is thus more transparency and openness in this area. However, from the start the directive was used as a means to classify funds.

An active fund that mainly invests in green and social bonds from emerging markets was not available until last month, when the BlackRock Emerging Markets Impact Bond Fund was launched. The new fund is one of the first two EMD funds with an Article 9 rating under the SFDR.