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 current adverse impacts policy in our responsible investments policies for each asset class. Subsequently, and before the end of 2021, we will publish an adverse impact statement as specified by the SFDR regulation. The statement will describe how we measure the main adverse impacts of investee companies and other investment assets on sustainability factors.
It will use a system of 14 mandatory indicators for corporate issuers and a smaller selection of indicators for Government debt and real estate assets, with a range of additional voluntary indicators which we will select and relevant to various funds and our view of which impacts to prioritise the identification and mitigation of. 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.
To meet the requirements set out under Article 5 of the SFDR, we have published additional information on remuneration and ESG in our Pillar 3 disclosure.
Asset Class Responsible Investment Policies
Credit & Equities - Responsible Investment & Sustainability Risk Policy
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
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
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.
Discover our responsible investment policies.
Aviva Investors Luxembourg Sustainability Risk Policy
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 Fund, Aviva Investors Climate Transition European Equity Fund, Aviva Investors Climate Transition Global Equity Fund and Aviva Investors Sustainable Income & Growth Fund works, including a description of their characteristics.
Responsible investment views
Cummings, carbon and COP26: An interview with Claire O’Neill
23 Jul 2021
In a wide-ranging interview with AIQ, the former UK minister of Energy and Clean Growth explains why the private sector needs a seat at the negotiating table if the world is to solve the climate crisis. Words by Miles Costello.
Investors should confront the dark side of tech
9 Jul 2021
Technology firms are often favoured by ESG funds because of their ostensibly clean, asset-light business models. But investors need to look deeper and challenge unethical and unsustainable practices across the industry, argue Louise Piffaut and Charles Devereux.
8 Jul 2021
No single technology is enough to tackle the climate crisis, a global and systemic issue that requires joined-up thinking. We flag different pathways to address warming gases in the atmosphere – five nature-based and five technical – and ask what steps are needed next.
In brands we trust
7 Jul 2021
The tech-driven trend toward direct-to-consumer is transforming consumer brands, their intermediaries and their marketing. Intimate relationships with customers and new shopping experiences are alluring, but companies must tread a fine line between hyper-personalisation and intrusion.
China’s Big Tech crackdown
5 Jul 2021
Like Washington and Brussels, Beijing is worried about the growing power of large technology companies. But China’s regulators are taking swifter, more radical action than their peers in the West.
The Anti-Social Network
2 Jul 2021
Facebook, Twitter and other platforms are drawing criticism for their failure to tackle hate content. But will the hit to their reputation do any lasting commercial damage?
How to assess social value: Guidance from Hatch
29 Jun 2021
Asset managers of many different hues claim they are thinking harder about their social role: the ‘S’ in ESG. But evaluating social value generated from investment decisions is not straightforward, as consultant Dr Kelly Watson from Hatch explains.
From social wash to social value
29 Jun 2021
The inequalities highlighted by COVID-19 have led to much soul searching, including among investors on whether they are doing enough to address the issues of the day. Ed Dixon, Aviva Investors’ head of ESG - real assets, contemplates how investors in tangible assets can put capital to work to drive change.
What does the data say?
What does the data say? Corporate tax, climate litigation and pub blues
25 Jun 2021
In this month’s instalment of our visual series on topical data themes, we look at corporation tax rates, climate-related litigation and the ongoing misfortune of pubs.
Shades of grey: Greenwashing poses risks for investors
18 Jun 2021
Greenwashing, whereby an organisation presents a misleading view of its sustainability credentials, has become more widespread and sophisticated in recent years. Now regulators and investors are fighting back.
Human rights: The key to understanding the 'S' in ESG
16 Jun 2021
Companies cannot thrive without healthy and happy employees, consumers and communities. Investors must use their influence with companies and other stakeholders to ensure the basic rights of these groups are respected.
Carbon accounting: Measuring what matters
11 Jun 2021
The focus on net-zero targets has intensified scrutiny on measurement and disclosure of greenhouse gas emissions. But carbon accounting is a young art, explains Dr Matthew Brander, senior lecturer at the University of Edinburgh.
Action now! Accelerating litigation to meet climate targets
3 Jun 2021
A landmark legal ruling in the Hague has ordered Royal Dutch Shell to move faster to bring its emissions in line with the Paris Agreement on climate. Thomas Tayler, a trained lawyer and senior manager at Aviva Investors’ Sustainable Finance Centre for Excellence, assesses the fallout.
What does the data say?
What does the data say? Tesla, the halo effect and reasons for CEO departures
28 May 2021
In the latest instalment of our visual series on topical data themes, we look at Tesla’s market cap relative to the European “Big Five” carmakers, the average CSR spending of FTSE 100 companies versus their procurement budget and the most common reasons for a CEO to leave a company.
Carbon credits: Seeing the wood for the trees
20 May 2021
As governments and companies strive to reduce carbon emissions and achieve net zero, questions are being asked about the role of natural climate solutions. We analyse differing approaches to offsetting and their impact on forest management.
Green is not always clean: Rising tide of greenwash brings risks for investors
19 May 2021
Some companies have long sought to mislead the public about their commitments to sustainability, but greenwashing has become more widespread and sophisticated in recent years. Now regulators and investors are fighting back.