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Different 'Flavours' of Compliance
Different 'Flavours' of Compliance

This article provides an overview of how much assistance and what type is appropriate for you

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Written by Rutger
Updated over a week ago

The level of your ambition for this project, as well as the bandwidth you are willing to allocate will consequently determine how much and in what type of assistance is most suitable to assist you in complying with the SFDR.

Flavours of Ambition

You can choose between three different 'flavours' of ambition for the outcome of this exercise ranging from mere compliance to thorough assessment.

ℹ️ Please note: You should read this article on the difference between entity-level and product-level and this one on the different product-level classifications before reading further.

On Entity-Level

  • Minimum Compliance. This option is recommended for those who are motivated to comply, but do not want or are not currently able to undergo thorough restructuring to incorporate ESG into their operations.

    • Suitable for:

      • Fund managers who do not wish to incorporate 'sustainability' into their investment strategy beyond the minimum requirements of the SFDR

      • Impact-focused Venture Capital, where all necessary processes are in place and our assistance is mainly needed to produce the deliverables on entity-level

  • Beyond Compliance. This alternative applies to those who want to comply and wish to begin considering sustainability in their processes, without making it a core part of their investment strategy.

    • Suitable for:

      • Fund managers that currently do not consider sustainability, but would like to start incorporating some processes

      • Fund managers that consider opening or transforming a Fund which considers 'sustainability characteristics' and can be classified as an 'Article 8' Fund

  • Thorough assessment. The last option is for those who want to go the extra mile and are looking to incorporate sustainability as core part of their investment strategy.

    • Suitable for:

      • Fund managers who either do not consider sustainability or only superficially, but would like to incorporate 'sustainability' as a pillar of their investment strategy

      • Fund managers which consider sustainability matters to a certain extent but would like to open or transform a Fund with a sustainable investment objective (classified as an 'Article 9' Fund)

On Product-Level

  • Minimum Compliance:

    • Suitable for:

      • Fund managers who do not want to have Funds which (begin to) incorporate sustainability matters beyond the minimum requirements of the SFDR ('Article 6' products)

  • Beyond Compliance:

    • Suitable for:

      • Fund managers who consider some minimal aspects of sustainability (e.g., through an Exclusion Policy) and would like to open a fund with sustainable characteristics, and classify it as an 'Article 8' product

      • Impact fund managers who want to classify their funds with sustainable investment objectives as such, namely as an 'Article 9' product

  • Thorough assessment:

    • Suitable for:

      • Fund managers who consider some minimal aspects of sustainability and want to open a fund with sustainable characteristics and meeting a 'sustainable investment objective', also characterised as an 'Article 8+'

Hopefully you can identify yourselves in one (or a few) of these categories, and communicate with us what you think the approach best suitable to your needs is.

Timeline

The timeline that you envisage for this exercise will largely depend on two factors:

  • Ambition. What is the outcome you desire?

  • Bandwidth. How many resources does your team allocate to reaching the outcome?

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