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UK ESG funds dip toes into SFDR

Dewi John
Dewi John
Head of Research – UK and Ireland, Refinitiv

Using Refinitiv Lipper data to explore how UK fund managers are responding to the EU Sustainable Finance Disclosure Regulation (SFDR).


  1. Lipper for Investment Management users can now identify whether funds are categorised as Article 6, 8 or 9.
  2. Less than 1 percent of total UK assets are designated as Article 9, with 6 percent as Article 8.
  3. The largest volume of ‘green’ money by asset class is in money market funds (£58.9bn), followed by equity (£25bn), mixed asset (£11.8bn) and then bond (£5.9bn).

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Refinitiv Lipper released data on Sustainable Finance Disclosure Regulation (SFDR) categorisation on 30 September. Users of Lipper for Investment Management can now identify whether funds are categorised as Article 6, 8 or 9, or not reported, filtering by domicile, asset class, promoter, fund category, and many other criteria.

Are UK fund management companies engaging with the SFDR?

Chart 1 shows that even though the UK is no longer subject to EU regulation, there is a significant degree of engagement with SFDR, even where funds are not distributed within the EU.

Chart 1:

When you need to make meaningful like-for-like comparisons across funds that share characteristics, Refinitiv Lipper is the answer

Although SFDR is EU legislation, 60 percent of UK-domiciled fund assets have so far been registered under the regulation, either as Article 6, 8, or 9 (non-ESG, ‘light green’, or ‘dark green’, respectively).

However, this needs some hefty caveats.

What’s not clear from the data at this point is whether all asset managers reporting their UK range as Article 6 are doing so because they classify these assets as not ESG, or because they are using Article 6 as a proxy for non-participation in SFDR.

Conversely, at this stage, we can’t be certain that all assets listed as ‘not reporting’ are doing so because they are outside of the jurisdiction of SFDR, or whether the fund managers still have to designate their funds’ relevant article. What we do know is that Article 8 and 9-badged funds are conscious designations, and can be judged as correct.

At the highest level, and rounding up to full percentage points, only 1 percent (£8.2bn) of total assets are registered as Article 9, with 6 percent (£97.5bn) Article 8. The majority (£846.5bn) of funds are being registered as Article 6.

The remaining 40 percent (£633.7bn) have not reported (Chart 1).

Comparing the UK’s take up of the SFDR with Europe

We get a sense of the relative degree to which the UK has engaged with SFDR by comparing it with France and Germany combined, and Switzerland (Chart 2).

Chart 2: UK, Swiss and German/French SFDR designation, AUM (LHS) and Fund Count (RHS) (%)

Chart 2: UK, Swiss and German/French SFDR Designation, AUM (LHS) and Fund Count (RHS) (%). UK fund managers' response to the SFDR
Source: Refinitiv Lipper

By count, 7 percent of UK funds are either Article 8 or 9, compared with 21 percent for Switzerland and 45 percent for Germany and France. By numbers of funds, those figures are 4 percent, 17 percent and 30 percent, respectively.

The higher proportion by assets indicates that larger funds, and fund managers, are more likely to be badging their funds as either light or dark green. This may indicate that it’s the larger operations that are most likely to have the resources to demonstrate their sustainability claims.

Also, in the UK at least, the inclusion of some fairly substantial money market assets under Article 8 does plenty to increase the size of this classification, and the magnitude of AUM percentage relative to fund count (see below).

Chart 3:

Engagement with Articles 8 and 9 of the SFDR in the UK

Looking at Article 8 and 9 funds in the UK only, just 8 percent of ‘green’ funds are Article 9 (Chart 3).

Chart 4: Article 8 & 9 AUM by asset class (£bn)

Chart 4: Article 8 & 9 AUM by Asset Class (£bn). UK fund managers' response to the SFDR
Source: Refinitiv Lipper

The largest volume of ‘green’ money by asset class is in money market funds (£58.9bn, summing Article 8 and 9 AUM), followed by equity (£25bn), mixed asset (£11.8bn) and then bond (£5.9bn).

However, turning to the much smaller Article 9 (dark green), equities dominate AUM, with £7.6bn of £8.2bn total Article 9 assets (Chart 4).

In total, there are more than four times the assets in Article 8 and 9 equity funds than there are within their bond equivalents. It’s a long-standing investor complaint that there are too few ways to implement ESG strategies outside of equities, and this data indicates that problem has still to be resolved.

Chart 5: Top Article 8 Lipper Global Classifications (£bn)

Chart 5: Top Article 8 Lipper Global Classifications (£bn). UK fund managers' response to the SFDR
Source: Refinitiv Lipper

Taking a more granular look at where the green money has gone, using our Lipper Global Classifications you can see the huge effect that the designation of almost £60bn of money market funds as Article 9 has had.

The next largest classification is equity global, at £7.6bn, then mixed asset USD flex – global at £5.3bn.

Chart 6: Top Article 9 Lipper Global Classifications (£bn)

Chart 6: Top Article 9 Lipper Global Classifications (£bn)
Source: Refinitiv Lipper

In line with other countries, UK Article 9 assets are much lower than Article 8, unsurprising, given their more stringent requirements. Indeed, for now at least, some of the bars in Chart 6 represent just one fund. For example, alternative energy (£1.8bn), and equity global small & mid cap (£1.7bn).

Chart 7: Largest UK Article 8 promoters (GBP bn)

Chart 7: Largest UK Article 8 promoters (GBP bn)
Source: Refinitiv Lipper

BlackRock dominates Article 8 AUM, with £45.2bn of the £97.5bn total, followed by Goldman Sachs (£12.9bn) and Legal & General (£6.3bn).

BlackRock’s assets are subdivided by: £43.8bn money market funds; £1.3bn equity; and £33m bond. Some £12.5bn (out of £12.7bn) of Goldman Sachs’ Article 8-badged assets are also within money market funds.

Chart 8: Largest UK Article 9 promoters (GBP bn)

Chart 8: Largest UK Article 9 promoters (GBP bn)
Source: Refinitiv Lipper

The line-up of top Article 9 providers looks very different, with Baillie Gifford leading with £3.2bn, followed by Ninety One (£1.8bn, which is via one alternative energy fund) and Federated Hermes (£1.7bn). All three’s Article 9 assets are in equity funds.

When you need to make meaningful like-for-like comparisons across funds that share characteristics, Refinitiv Lipper is the answer


  1. Calculated as registered for sale in the UK, reporting currency GBP