EU Sustainable Finance Disclosure Regulation

The EU Sustainable Finance Disclosure Regulation (SFDR) is a new set of European Union rules that came into effect on March 10, 2021, with the goal of making the sustainability profile of funds more comparable and easy to understand for investors. They categorise products into specific types and include metrics for assessing the environmental, social and governance (ESG) impacts of the investment process for each fund.

As the name suggests, this regulation will place much more emphasis on disclosure. The information on this page describes our approach to SFDR and includes our policies and procedures, disclosed in accordance with these new rules.

Many of our clients will also be subject to these new requirements. Apart from our disclosures in prospectuses, annual reports and on this website, we will provide our clients with the information they need to comply with SFDR.

Background to SFDR and how it impacts Aviva Investors

SFDR is part of the EU’s wider Sustainable Finance Framework, which is backed by a broad set of new and enhanced regulations that will apply across the region. The framework includes the Sustainable Finance Action Plan, which aims to promote sustainable investment across the EU, and a new Taxonomy to categorise economic activity through a sustainability lens and help create a level playing field across the region.

Many of the new measures are a response to the landmark Paris Agreement on climate change in December 2015, and the United Nations 2030 Agenda for Sustainable Development published earlier the same year, which set out the 17 Sustainable Development Goals. SFDR and other regulations are also aligned with the European Green Deal, which aims for the EU to be ‘climate neutral’ by 2050.

Product classifications under SFDR

The most visible and impactful aspect of SFDR is the classification of funds and mandates into three categories, as laid out by Articles 8 and 9 of the SFDR and those funds not defined by either article, referred to as ‘neutral’ funds.

Neutral funds do not integrate any kind of binding sustainability controls into their investment process and can include stocks that may be excluded by ESG-focused funds, such as tobacco companies or thermal coal producers. While neutral funds are still allowed to be sold in the EU – provided they are clearly labelled as non-sustainable – they may not be promoted as ESG funds when matched against more sustainable products.

Among other characteristics, Article 8 products promote environmental or social characteristics, or a combination of those characteristics, provided the companies in which investments are made follow good governance practices.

Article 9, also referred to as ‘products targeting sustainable investments’, covers products targeting bespoke sustainable investments and those that have sustainable investment as their objective.

Aviva Investors fund classifications under SFDR

Currently, most funds managed by Aviva Investors will be classified as neutral under SFDR. We also have a number of Article 8 funds, including our Climate Transition range. We do not currently manage any Article 9 funds or mandates.

Aviva Investors has updated EU fund prospectuses, website product information and Key Investor Information Documents to align with SFDR rules where applicable, along with updated responsible investment policies shown below.

Adverse impact statement

We have described our adverse impacts policy in our responsible investments policy. Subsequently, we will publish an adverse impact statement before the end of June 2021. The statement will describe how we measure the main adverse impacts investee companies have on sustainability factors.

It will use a system of 14 mandatory and 18 voluntary indicators, with sets of specific indicators for individual asset classes. Mandatory indicators range from carbon emissions, fossil fuel exposure and waste levels to gender diversity, due diligence on human rights and exposure to controversial weapons.

Remuneration

Through Aviva Investors’ Global Reward Framework, all investment employees should support responsible investment and integrate ESG considerations into their investment processes, including the consideration of sustainability risk. ESG metrics and research are embedded in the investment process and form part of the investment scorecard and annual risk attestation. The chief investment officers and investment desk heads consider how investment employees demonstrate their commitment to ESG processes as part of the determination of performance and pay outcomes.

Asset Class Responsible Investment Policies

Credit & Equities - Responsible Investment & Sustainability Risk Policy

PDF 1.6 MB 8 pages

This policy describes how we integrate our responsible investment philosophy into each asset class investment process. Credit and Equities covers funds managed by Aviva Investors that primarily invest in equities and bonds and includes money market funds.

Multi-Asset & Macro & Liability-Driven Investment - Responsible Investment & Sustainability Risk Policy

PDF 2.0 MB 10 pages

This policy describes how we integrate our responsible investment philosophy into each asset class investment process, Multi-asset covers a wide variety of product types including Multi-Strategy, Multi-Asset ranges, Fund of Funds, Liability Driven Investment, Global Convertibles.

Real Assets - Responsible Investment & Sustainability Risk Policy

PDF 1017.1 KB 5 pages

This policy describes how we integrate our responsible investment philosophy into each asset class investment process, Real Assets covers traditional real estate products and our alternatives real assets business including infrastructure equity and commercial property/private market debt.

Aviva Investors Luxembourg Sustainability Risk Policy

PDF 204.9 KB 5 pages

Aviva Investors Luxembourg (AILX) recognises and embraces its duty to act as long-term stewards of clients’ assets, maintaining a deep conviction that environmental, social, and governance (ESG) factors can have a material impact on investment returns and client outcomes. This policy includes the key pillars AILX’s ESG approach including consideration of sustainability risk and how they apply to the funds we operate.

Luxemburg SICAV funds with SFDR ESG characteristics (article 8)

For more details of how the objective and policy of the Aviva Investors Climate Transition Global Credit FundAviva Investors Climate Transition European Equity FundAviva Investors Climate Transition Global Equity Fund and Aviva Investors Sustainable Income & Growth Fund works, including a description of their characteristics.

 

Turning talk into action

It is only through commitment, passion and genuine collaboration that we can bring our sustainable aspirations to life. In our “This is how” series, we profile some of the ways ESG helps us be better investors, for our clients, and for the world around us.

This is how

Responsible investment views

Responsible investment

Responsible investment isn’t just the right thing to do, it makes sound financial sense.

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Fund centre

Access key fund documentation and performance reports.

View fund centre