SFDR vs SDR Sustainable Fund Classifications – Mapping the Differences

With UK/EU regulatory divergence a key theme now, and with the existing SFDR classifications and the new SDR product labels, how do they relate to each other, and how do you map similar funds under the two regimes?

It’s not as simple as might have been hoped, but there is good guidance from the FCA about how to go about it. The diagram below is theirs and shows that it is not a simple mapping exercise, rather a completely different classification process

What this means is:-

·        Any Article 6 products will not qualify for a sustainable label (no surprise there)
·        Article 8 and 9 products could conceivably be allocated any one of the sustainable labels

Obviously, this means applying the FCA criteria on cross-cutting, and category-specific to each product individually. It’s even conceivable (if unlikely) that an article 8 or 9 product doesn’t qualify for a sustainable label at all!