SUSI Funds in highest sustainability category under new EU regulation
- SUSI funds classified as Article 9 under European Union’s Sustainable Finance Disclosure Regulation (SFDR)
- The regulation seeks to effect more transparency on sustainability claims in financial markets
Zug/Zurich, 18 March 2021 – The EU’s Sustainable Finance Disclosure Regulation entered into force on 10 March 2021, requiring financial market participants to make disclosures with regards to their products’ respective environmental and social sustainability. Under the new regulation, SUSI Partners’ funds have been classified as Article 9 funds, the highest standard in terms of sustainability.
The new regulation in short
The regulation’s aim is to introduce more transparency on sustainability to financial markets, which will significantly facilitate the selection of ESG-compatible products for investors seeking to align their portfolios with sustainability targets. SFDR will support the prevention of greenwashing, the practice of using descriptions and monikers like ESG, sustainable and green for the promotion of products and companies that in reality do not, or only marginally, deliver on any of the implied promises. It provides a framework that sets forth comparable requirements for financial products to be classified as a “sustainable investment”, which is defined as an economic activity that either contributes to an environmental or a social objective (→ Article 8 classification), or that has a clear sustainable investment objective (→ Article 9 classification).*
While the basic requirement for either classification is that the investee company follows good governance practices, Article 8 includes a wider range of products that to some extent integrate ESG-factors into their investment process. An Article 9 classification requires a more substantial commitment to sustainability, which includes a clear sustainable investment objective and the assurance that no other environmental or social objective is harmed in the process. Examples of such sustainable investment objectives are a positive impact on biodiversity or the circular economy, social objectives that e.g. tackle inequality or foster social cohesion, and of course the reduction of greenhouse gas emissions, which is an explicit objective of all SUSI funds.
*Under SFDR Article 6, financial market participants whose products do not qualify as “sustainable investments” are also required to disclose the extent to which they consider sustainability risks in their investment process, or, in case they do not, to explain why they deem such risks irrelevant for the respective product.
Article 9 classification of SUSI funds
Reducing greenhouse gas emissions, and CO2 in particular, contributes to the overarching goal of keeping a global temperature rise in this century well below 2°C to mitigate the adverse effects of global warming. Since its inception, SUSI has invested exclusively in sustainable energy infrastructure supporting the transition to a clean energy system. This includes investments supporting the shift of energy production away from fossil fuel-based generation, investments increasing the energy efficiency and productivity of existing infrastructure, and investments enabling the utilisation of clean energy. The resulting CO2 emissions savings are quantified in accordance with the World Resources Institute’s Greenhouse Gas Protocol, as well as the recommendations by the Partnership for Carbon Accounting Financials (PCAF), and externally certified by South Pole Group.
Sustainability has always been a distinctive company value and objective of SUSI Partners and we believe that responsible investing is fundamental to our fiduciary duty to our clients and their beneficiaries. We are convinced that the incorporation of sustainability principles into our investment activities leads to a more balanced risk-return profile for our investors, ultimately securing their beneficiaries’ prosperity in the long term. Our investment process ensures that CO2 emissions are reduced, that no other social or environmental objectives are harmed, and that all companies in which investments are made follow good government practices. It entails a rigorous screening and due diligence process designed to reject proposed investments that do not meet the required criteria. Furthermore, active ownership and regular reporting are maintained to continuously improve and report on the acquired assets’ environmental, social, and financial performance.
By supporting investors in making more informed choices, we believe that the EU’s SFDR represents an important step on the journey towards a more stable, sustainable and transparent financial system that benefits all stakeholders.
More details on SUSI’s sustainabiltity strategy are provided here.
More information on all SUSI funds, including the respective Article 9 disclosures, is available to qualified investors here.