The SFDR (Sustainable Finance Disclosure Regulation) establishes compulsory ESG (Environmental, Social, and Governance) disclosure requirements that asset managers must adhere to. The primary objective is to enhance transparency regarding their investment strategies, mitigating the risk of greenwashing - misleading claims that products are sustainable when they may not be. Under the SFDR's classification system, funds are categorised as either article 6, 8, or 9, based on their specific characteristics and level of sustainability.

1- Article 8

To meet the requirements of Article 8: Transparency of the promotion of environmental or social characteristics under the SFDR, the following must be provided:

1. Information on how the fund meets the environmental or social characteristics it promotes, or a combination of both, while ensuring that the investee companies adhere to good governance practices.
2. If an index has been designated as a reference benchmark, disclosure must include information on whether and how this index aligns with the aforementioned environmental or social characteristics.

By fulfilling these disclosure obligations, funds can demonstrate their commitment to transparency and responsible investing, helping investors to make well-informed choices and fostering confidence in the promotion of sustainable and socially responsible investments.

According to the SFDR guidelines, financial market participants are required to include information about the methodology used for calculating the index referred to in Article 6(1) and (3) in their disclosures.On the other hand, Article 9 funds are those that have explicit ESG (Environmental, Social, and Governance) or other core objectives, distinguishing them from Article 8 funds. Article 9 funds place sustainability and responsible investment at the core of their strategies, making them distinct in terms of their primary focus.

2- Article 9

To meet the requirements of Article 9: Transparency of sustainable investments under the SFDR, the following information must be provided:

1. Details about the fund's sustainable investment objective and if an index has been chosen as a reference benchmark, an explanation of how this designated index aligns with the fund's sustainability objective.
2. An explanation of the reasons and methods used to demonstrate how the designated index, aligned with the sustainability objective, differs from a broad market index.

In comparison to Article 8 funds, which focus on promoting environmental or social characteristics while adhering to good governance practices, Article 9 funds go a step further by actively seeking to make a positive impact on society or the environment through sustainable investments. At the core of their offering, Article 9 funds have a non-financial objective, setting them apart as more dedicated forerunners in sustainability.

Both Article 8 and Article 9 funds are considered ESG-aligned, demonstrating their commitment to environmental, social, and governance considerations. However, Article 9 funds take sustainability to an even higher level, earning the distinction of being categorized as either "light green" or "dark green," signifying their deeper dedication to sustainable practices.

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