End-to-end SFDR Article 8 framework for a flagship long-only fund.
An equity long only manager was preparing to have their flagship fund disclose under Article 8 SFDR. As such, the Manager needed to articulate the fund's investment process, including the intentional identification and promotion of E/S characteristics, the consideration of sustainability risks and good governance practices, and Environmental and Social factors.
With widespread investor and regulatory scrutiny of funds disclosing under Article 8, the Manager needed an experienced partner to undertake a rigorous review of their investment process and set up a robust but bespoke framework that met Article 8 SFDR requirements for both the flagship and future funds. For that, they reached out to NPA.
End-to-end SFDR implementation
- 01
Article 8 Current State Assessment
ObjectiveAssess whether the client's investment strategy could suitably disclose under Article 8 SFDR.
ImplementationNPA conducted a fund-level assessment of the client's current ESG practices and concluded that the investment strategy could disclose as an Article 8 fund. However, NPA identified that the client needed a more systematic process for identifying which Environmental/Social characteristics the fund would be promoting for each investment.
- 02
Article 8 Framework Development
ObjectiveEstablish a formal ESG Integration framework tailored for Article 8 SFDR.
ImplementationNPA supported the client in addressing gaps from the current state assessment by developing a practical pre-investment and engagement framework, alongside data collection processes needed to align with the requirements.
- 03
Article 8 Pre-Contractual Disclosures
ObjectiveDraft the necessary SFDR pre-contractual disclosures.
ImplementationNPA worked with the client's legal counsel to draft all relevant SFDR disclosures, both at the entity and fund level, ensuring they accurately and transparently presented the client's responsible investment process, minimising any chance of greenwashing.
- 04
ESG Training
ObjectiveEnsure the investment team understands Article 8 SFDR and their extended responsibilities.
ImplementationProvided an ESG training session which walked the investment team through SFDR and the client's upgraded responsible investment process, clarifying internal responsibilities and expectations.
- 05
Article 8 Periodic Reporting
ObjectiveComplete the fund's required Article 8 SFDR periodic reporting.
ImplementationNPA created a reporting template to collect the necessary data for periodic reporting. NPA then collected the data from the client's investees and drafted the periodic report, which was reviewed and signed off by the client's legal counsel.
By implementing NPA's tailored recommendations, the client was able to successfully have their flagship fund disclose under Article 8 SFDR, meeting both the regulatory requirements and their investor expectations.