Triodos IM: EU taxonomy puts ESG funds at disadvantage
The European Union, under its taxonomy, requires SRI funds to declare what part of their portfolio is green by 1 January 2023, but there is still much work to be done to address the pitfalls in the EU’s sustainable finance framework, Triodos Investment Management’s Hadewych Kuiper and Nikkie Pelzer (photo) said in an interview. “Some asset managers prefer to classify their sustainable funds under Article 6” because it requires less reporting, making it cheaper.
‘Lack of taxonomy harmonisation leads to fragmentation’
The sustainable fund market in Luxembourg and other European fund domiciles has continued its strong growth of recent years, but the short-term impact of the Ukraine war has already disrupted the move to a green future. Still, positive developments are expected in the longer term. The latest updates were set out in the 2022 edition of the European Sustainable Investment Funds Study by Zeb and Morningstar on behalf of the Association of the Luxembourg Fund Industry.