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AMF Proposes Minimum Requirements for Article 8, 9 Funds

Autorité des Marchés Financiers (AMF), France’s stock market regulator, has proposed a targeted review to introduce minimum environmental requirements in European law for financial products to be classified as Article 8 or 9 under the Sustainable Finance Disclosure Regulation (SFDR). The SFDR, which was designed as an ESG transparency regime for financial entities and products, requires financial market participants to publish information on their sustainability communications and practices. However, it currently neither imposes minimum requirements, nor defines the concept of sustainable investment. AMF argues this means Article 8 and 9 classifications do not currently “aim to assess the nature or extent of the manager’s commitment to sustainability”. The regulator recommended that minimum environmental criteria should be established for the classification of products as Article 8 or 9, with compliance with these criteria subject to national supervision. It also recommended that criteria for Article 9 funds “continue to be more stringent” than those for Article 8. Further, the AMF said that financial market participants responsible for managing Article 8 and 9 funds should adopt a “binding ESG approach” in their investment decision-making process, and that Article 9 funds should exclude investments in fossil fuel activities that are not aligned with the European Taxonomy.  

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