The SFDR is a European Union (EU) regulation designed to accelerate flows of finance to sustainable investments, level the playing field, increase transparency in relation to sustainability risks, and reduce the potential for greenwashing of investment products. It is already having a significant impact on asset managers in the EU and around the world. Find out how asset managers are managing the implementation of SFDR and the related impact on their investment strategies and operations in this new report from KPMG International.
Why the SFDR matters
1Report title: SFDR Article 8 and Article 9 Funds: Q4 2023 in review
Source: Morningstar Inc. website, United Kingdom, (December 2023)
SFDR is designed to create transparency and trust in financial markets by setting clear rules and requirements related to sustainable investment disclosures for asset managers and financial market participants. It is part of the European Commission’s Action Plan for Sustainable Finance, and it aims to help redirect capital flows towards sustainable activities. As such, its influence on asset managers with funds in, or marketed into, the EU is significant.
For asset managers with funds in or marketed to the EU, the SFDR requires decisive action and organisational change supported by a clearly defined investment strategy and approach to sustainability.
Explore our survey data and get the latest insights on SFDR in this new report by KPMG International.
How is it impacting asset managers?
In KPMG International’s survey of 100 asset managers and financial market participants, 47 percent of respondents report that SFDR has had a positive impact on their firm, with the strongest benefits arising from the increased transparency they are achieving in their reporting across the firm.
Our survey shows that asset managers see the strongest benefits from the increased transparency they are achieving in their reporting across the firm. It is worth noting that these benefits are all interlinked — streamlined ESG data processes across the firm enables increased transparency in reporting which, in turn, encourages greater buy-in from across the organisation — including management, deal and operations teams.
According to our survey, asset managers have also experienced a markable increase in demand for Article 8 and Article 9 funds. Managers in the Europe, Middle East and Africa (EMA) region were the most likely to report increased demand (91 percent) and those in North America the least likely (59 percent), reflecting the investment criteria and allocation requirements of regional investors.
Five "no-regret actions"
The report outlines five “no-regret actions” that asset managers can take to help improve maturity and enhance agility.
KPMG’s global network of asset management and sustainable finance professionals is well positioned to help organisations turn regulatory change into growth opportunity.
KPMG teams take a holistic view of SFDR, integrating viewpoints gained from working with investors, managers, regulators and service providers to help clients make informed decisions that can drive their business forward in times of uncertainty.
About the KPMG 2023 SFDR Market Assessment
This survey, conducted with 100 private equity, wealth and asset managers between 31 July and 22 August 2023, provides an insight into the current state of the private equity, wealth and asset management market with respect to the SFDR implementation and gauges the sustainable investment ambitions of firms globally. Respondents were captured across a variety of company sizes, with more than three-fourths of respondents representing firms greater than US$1 billion in Assets Under Management (AUM). The survey included decision makers from eight markets (Australia, Canada, China, France, Germany, Japan, the UK, and US) within wealth and asset management and private equity. The SFDR research involved 53 C-suite level respondents, with wealth and asset management being the largest financial sub-sector represented.
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Teo Wee Hwee
Partner, Co-Head of Real Estate, Tax and Head of Asset Management & Family Office
KPMG in Singapore