Ian Conlon

The analysis, based on a review of over 26,000 funds across the two largest fund domiciles in the EU, Ireland and Luxembourg, shows a 20 per cent growth year-on-year in the number of European sustainability funds, with assets now surpassing €5 trillion.

The report, titled SFDR Impact Analysis: A Comprehensive Review of ESG Integration in Europe, is the second edition of a series that examines the current state and future trends of sustainable investing in Europe.

Authored by lawyers from the Maples Group’s Irish and Luxembourg ESG practices, the report is designed to assist asset managers in navigating the complex and evolving SFDR requirements, as well as providing valuable insights and peer analysis on the approaches taken to date.

The asset value of European sustainability funds has increased by 19 per cent over the last 12 months and now stands at over €5.5 trillion, the report notes.

A total of 28 per cent of Irish and Luxembourg-domiciled funds are sustainability-focused funds (i.e. either SFDR Article 8 or SFDR Article 9 funds), and 39 per cent of all assets held in Luxembourg and Irish-domiciled funds are sustainability-focused funds.

Most (51 per cent) of all new funds launched in Europe in 2023 are now classified as sustainably-focused.

Ian Conlon, Ireland funds and investment management partner and head of the Irish sustainable investing team at the Maples Group, said: “We are delighted to publish this second edition of our SFDR Impact Analysis, which provides asset managers with a valuable resource to navigate the complex and evolving regulatory framework of sustainable finance in Europe.

“As our analysis demonstrates, SFDR is working as a catalyst for the transition to a low-carbon, more sustainable economy, by increasing the flow of capital towards sustainable activities and enhancing the transparency and accountability of sustainability disclosures.

“We also highlight the challenges and risks that asset managers face in complying with SFDR and from a regulatory context there remains the risk for compliance gaps.

“We believe that asset managers need to adopt a proactive and holistic approach to SFDR compliance, by ensuring that their policies, procedures, resources, and disclosures are aligned with their sustainability objectives and strategies, and by staying abreast of the latest developments and best practices in sustainable finance.”