Article 9 ESG Scores Higher Than Article 8 – EFAMA

The average ESG scores for Article 9 funds are slightly higher than those of Article 8 funds, according to analysis in the European Fund and Asset Management Association’s (EFAMA) new Market Insights series issue. EFAMA analysed the ESG ratings assigned by commercial providers Refinitiv and Morningstar Direct to a large sample of Article 8 and 9 funds, focusing on the differences between ratings given to the same funds by these firms and between ratings of Article 8 and Article 9 funds. Refinitiv scored Article 9 funds higher than Article 8 for ESG, although a large number of Article 8 funds have “relatively high” ESG scores, while some Article 9 funds have particularly low scores. Morningstar’s sustainability ratings showed 71% of Article 9 funds scored higher than ‘average’ in their ESG risk management, with Article 8 funds averaging at 54%. EFAMA also found that the ESG ratings from Refinitiv and Morningstar showed only a small positive correlation. Certain funds with a low Refinitiv score do well in the Morningstar ratings and vice versa, although EFAMA said this is “not too surprising”. Vera Jotanovic, EFAMA’s Senior Economist, said: “From our analysis we conclude that different ESG scoring/rating methodologies have different measurement objectives, which are not necessarily in line with the SFDR classification or investors’ ESG preferences.” 

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