The European Commission has presented its long-awaited draft for a reform of the Disclosure Regulation: It provides for a fundamental restructuring of the sustainability categories of fund products. The previous categories Article 6, Article 8 and Article 9 will be replaced by a new classification. The three new product groups are called Sustainable, Transition and ESG Basics.
Sustainable products are based on what was previously expected of Article 9, but on a much more binding basis. The majority of the portfolio, i.e. at least seventy percent, must demonstrably contribute to environmental or social goals. This contribution must be measurable and professionally verifiable. The EU taxonomy remains an important point of reference, even if it does not necessarily have to cover every item. In addition, strict exclusions apply, for example for controversial weapons, tobacco and fossil fuel activities without a promising phase-out plan.
