ESG
Navigating the Path to Carbon Neutrality: A Guide for Climate-Conscious Investors
Discover how climate-conscious investors use Carbon Budget Divergence (CBD) and Implied Temperature Rise (ITR) to build Paris-aligned portfolios. Find out more
As investors, we all have a part to play in building a sustainable future. We know this matters greatly to our clients, communities and stakeholders and it matters to us too.
ESG investing requires purposeful action. Following the introduction of the Sustainable Finance Disclosure Regulation (SFDR), we’ve thoroughly reviewed our fund range so we can continue to meet the needs of our clients. An increasing number of existing and newly launched products in Invesco’s fund range are now classified as SFDR Article 8 and SFDR Article 9.
Invesco’s SFDR article 8 and 9 product offering is now:
Article 8 funds are defined by the SFDR as “a fund which promotes, among other characteristics, environmental or social characteristics, or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices”.
Managers of products must have clear information on how the environmental and social characteristics are met. If an index has been designated reference benchmark, there needs to be information on how the index is consistent with those characteristics. There also needs to be information as to where the methodology used for the calculation of the reference index can be found.
Exclusion strategies can also be used for Article 8 funds. Our exclusions framework for some of our Article 8 funds are:
UN Global Compact
International sanctions
Controversial weapons
Coal
Unconventional oil & gas
Tobacco
Others
*Additional exclusions may also apply to some of our other Article 8 and Article 9 fund range.
Article 9 funds are defined as “products that have sustainable investment as their objective, and which invest in economic activities that contribute to an environmental objective, as evidenced by the fact that the investee companies follow good governance practices”.
Managers of products are required to provide clear and accurate information to investors about their sustainable investment objective. If a fund has an index as a reference benchmark, there must be information on how it’s aligned with the sustainable investment objective and why and how this index differs from a broad market index. If there’s no index there needs to be an explanation on how the sustainable investment objective are attained.
The investee companies in these activities must follow good governance practices, such as sound environmental management, ethical business conduct and responsible corporate governance.
The SFDR is part of the broader European Union Sustainable finance Action Plan, which aims to mobilise capital towards sustainable investments and ensure that financial institutions and investors consider sustainability factors in their decision-making processes.
The rules impose mandatory ESG disclosures for financial market participants on how they integrate ESG into their products. It improves transparency of sustainability related products and creates a level playing field for investors to compare products and understand the impact of their investment decisions.
Sustainable finance refers to financial activities and practices that integrate ESG factors into investment decisions, lending practices and other financial services. It seeks to align financial activities with sustainability objectives and promote the long-term well-being of both the economy and the environment.
The objective of sustainable finance is to promote a shift towards a more sustainable and resilient global economy. It encourages financial institutions, investors and businesses to consider not only financial returns but also the broader environmental and social impacts of their activities. By integrating sustainability considerations into financial decision-making, sustainable finance aims to drive positive change and contribute to a more sustainable future.
Sustainable investing refers to an investment approach that considers ESG factors in addition to financial returns. Sustainable investing seeks to generate positive social or environmental impact alongside financial performance.
Sustainable investors evaluate companies and investment opportunities based on their performance and practices related to environmental sustainability, social responsibility, and corporate governance. Factors they consider include carbon emissions, labour practices, board diversity, community engagement and ethical conduct.
Navigating the Path to Carbon Neutrality: A Guide for Climate-Conscious Investors
Discover how climate-conscious investors use Carbon Budget Divergence (CBD) and Implied Temperature Rise (ITR) to build Paris-aligned portfolios. Find out more
Impact investing: climate adaptation and transition in a changing world
If we are to live more sustainably by 2030, the Climate Policy Initiative estimates that US $4.3 trillion will be needed annually. Climate adaptation and transition projects are helping, but more finance is needed. Find out more.
2023 Stewardship Report
Our 2023 Stewardship Report highlights our commitment to sustainable growth and responsible asset management, reinforcing our mission to prioritise long-term value.
1At Invesco we continuously monitor any applicable sanctions, including those imposed by the UN, US, EU and UK. These sanctions may preclude investments in the securities of various governments/regimes/entities and as such will be included in our compliance guidelines and workflows designed to ensure compliance with such sanctions. The wording of international sanctions is something that we pay particular attention to as there are occasions where sanctions can exist in limited form, for example allowing investments in the secondary market.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Data as at 12.06.2023, unless otherwise stated.
This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
Views and opinions are based on current market conditions and are subject to change.