Sustainable Finance Disclosures Regulation (SFDR)

Sustainable Finance Disclosures Regulation

(Regulation (EU) 2019/2088)

The policy agenda known as the EU sustainable Finance Action Plan, included mandatory reporting and disclosure regulations in the form of the Sustainable Finance Disclosures Regulation (SFDR). The SFDR establishes a hierarchy of categories based on investment focus.

Compliance with the SFDR regulation is mandatory for organisations promoting and distributing products and supplying portfolio management services into the EU. The regulation specifically applies to Stewart Investors funds within the First Sentier Investors Global Umbrella Fund plc. The reporting and disclosures is also relevant to our segregated mandate clients based in the EU.

All in scope products have to report under Article 6 on whether ESG is integrated into investment decisions. Products may also be classified as Article 8 (if they promote environmental or social characteristics) or Article 9 (if they have a sustainable investment objective). The Sustainable Funds Group strategies are aligned to Article 9.  

Article designations for our strategies 

What does Article 9 require us to do?

While Article 9 categorisation does not change our investment objective or our approach, it does require us to change the way we explain and illustrate the sustainable development benefits of our approach and will also require us to provide additional reporting. We have been evolving our articulation over the last 18 months and examples of the steps we have taken include our work on Project Drawdown, Human Development Indicators and our interactive map which provides information on the investment rationale for every company we invest in, the contribution it makes to sustainable development, key risks and engagement topics .

Below is a summary of disclosures and explanations required for the official product documentation.

Sustainable investment objective

Our strategies seek to achieve long-term capital appreciation by making investments that contribute to positive social and environmental sustainability outcomes.

Positive social sustainability outcomes include the enablement of improved health and wellbeing; access to income-generating and enterprise opportunities; fair employment and workplace safety; access to education and learning opportunities; communication and access to information; financial inclusion; sustainable transport and mobility; better access to housing, water, sanitation and electricity; and social inclusion and reduced inequality.

Positive environmental sustainability outcomes include more careful, efficient and productive use of natural resources; reduced waste and improved waste management; the wider adoption of circular economy practices and measures; the adoption of renewable and cleaner energy technologies; reduced greenhouse gas emissions; reduced water, air and other environmental pollution; a slowing in the rate of land degradation, land use change and loss of forests and biodiversity; and measures and technologies that enable climate change adaptation and resilience.

The hallmarks and binding elements of our investment strategy are an exclusive focus on companies that contribute to and benefit from sustainable development; a research-driven, fundamental, bottom-up approach to the selection and ongoing analysis of investments; a focus on the quality and sustainability attributes of every company; a focus on company stewardship and sound governance; a long-term investment horizon; and a commitment to engagement in order to address sustainability concerns and issues.

No significant harm to the sustainable investment objectives

Our investment process results in portfolios composed of companies without material exposure to harmful products and services. Our Position Statement on harmful and controversial products and services defines the harmful business activities we avoid as a result of our bottom-up approach.

For activities and practices we find inconsistent with our investment philosophy we have set a materiality threshold for direct involvement in the relevant activities of 5% of revenue. In the instances, we may make investments where exposure is above the 5% threshold and disclose this on a quarterly basis. 

Sustainability indicators

A list of sustainability indicators we will report against include carbon emissions, CEO pay ratios, board gender diversity and employee engagement. Our initial choice of indicators was based on relevance, data availability, and alignment with the core metrics we had already decided to start reporting against.


From 2022 we will start reporting on how we meet our sustainability objectives.

Below are links to the firm-level disclosures required to be made under SFDR by the First Sentier Investors group.

Article 3 – Policy relating to the integration of sustainability risks in our investment decision-making process.

Article 4 - Transparency of adverse sustainability impacts at entity level – Principal Adverse Impacts Statement.

Article 5 - Transparency of remuneration policies in relation to the integration of sustainability risks.

Article 6 - Transparency of the integration of sustainability risks.

Article 10 - Transparency of the promotion of environmental or social characteristics and of sustainable investments on websites.

The Prospectus for the First Sentier Investors Global Umbrella Fund plc now includes an SFDR appendix disclosing the required pre-contractual information and Fund categories.

Related articles