March 8, 2022

UK Fund Managers and SFDR

by Dewi John.

More than 60% of UK ethical fund assets have been badged as Article 8 or 9, despite Britain not participating in the regulation



Although the UK isn’t signed up to the EU’s Sustainable Finance Disclosure Regulation (SFDR), about two-thirds of UK-domiciled fund assets[1] have so far been registered, either as Article 6, 8, or 9: non-ESG, “light green”, or “dark green”, respectively.


Chart 1: UK Funds by SFDR Classification (AUM, %)

Source: Refinitiv Lipper


That amounts to 62.5% of assets flagged by Refinitiv Lipper as ethical, and 8.4% of total UK assets. Some £19.2bn of total assets are registered as Article 9, with £162.7bn for Article 8. The majority (£1,247.5bn) of funds have been registered as Article 6. The remaining 34% (£724.3bn) have not reported (Chart 1).


European Comparisons

We get a sense of the relative degree to which the UK has engaged with SFDR by comparing it with France and Germany combined, as well as Switzerland (Chart 2). The latter is a useful comparator, as, like the UK, it’s an important European financial centre outside the EU.


Chart 2: UK, Swiss, and German/French SFDR Designation, AUM (%)

Source: Refinitiv Lipper


By AUM, 8.4% of UK funds are either Article 8 or 9, compared to 44.7% for Switzerland and 49.9% for Germany and France. What’s surprising is not just the lower level of participation not only with respect to EU members, but also relative to Switzerland; it’s that even when those funds that have not reported are excluded, the proportion of Article 8 and 9 funds to total reporting funds (Articles 6, 8 and 9) is still much lower than for Switzerland, and France and Germany: 12.7% for the UK compared to 54.6% and 51.4%, respectively. That suggests that, while ethical fund uptake is becoming increasingly important in the UK, the country lags its European peers.


Chart 3: UK Assets Under Management, Articles 8 & 9 Only (%)

Source: Refinitiv Lipper


In the UK, 11% of so-called green funds are Article 9 (Chart 3). That compares to 6% for France and Germany. In terms of total assets, 0.89% of UK assets are Article 9, with that percentage being 3% for France and Germany. So, while there’s a relative weighting to “dark green” in the UK relative to other sustainable funds, ESG uptake—whether through SFDR or more broadly—is lower in the UK than with continental peers.


UK ‘Green’ Assets by Classification

Chart 4: Article 8 & 9 AUM by Asset Class (£bn)

Source: Refinitiv Lipper


Equities comprise the greatest number of assets (£65.7bn). Next follow money market (£61.8bn), bond (£28.7bn), mixed asset (£18.5), and alternatives (£7bn). Equity vehicles have attracted the bulk of Article 9 assets (£15.8bn), followed by bonds (£3.3bn). While UK real estate ethical AUM is £22.6bn, only £128m is SFDR registered, all of which is Article 9. It’s something of an anomaly, because UK real estate tends to have broader appeal, because of the way property law is tilted more strongly in favour of the owner in the UK when compared to other European countries.


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

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 more than £60bn of money market funds as Article 9 has had. The next largest classification is Equity Global, at £18.8bn, then Mixed Asset GBP Flexible at £11.4bn.

When it comes to flows, rather than stock, a rather interesting picture emerges, as investors are using the shift to green assets to move out of non-ESG equity assets across various geographies and into ESG global equity funds—a significant trend over the past couple of years, and something at which Refinitiv Lipper has taken a more in-depth look elsewhere. So, it’s not just that investors are swapping brown assets for green, like-for-like, but that this shift to sustainability is going hand-in-hand with a shifting asset class allocation.


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. There are no Article 9 money market funds, so here Equity Global muscles its way into first place (£8.5bn), followed by Alternative Energy (£4.8bn), despite the large market correction in the early part of last year that provoked gnawing fears that an ESG bubble may have developed.

One noteworthy aspect of this chart in comparison to the previous (Article 8) is the greater prevalence of bond classifications in the line-up, as ESG activist investors increasingly look to debt as a way of linking capital to quantifiable sustainability outcomes.


Dominant Fund Managers

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

Source: Refinitiv Lipper


BlackRock dominates Article 8 assets, with £41.1bn, followed by Legal & General (£3.9bn) and HO Hambro Capital Management (£2.9bn) (Chart 3).

Article 8 fund manager rankings are subject to a fair amount of volatility, as money market assets, which make up a large proportion of these funds, are the most short-term, and when we looked at this in October both net assets and rankings looked rather different at the top end of the table—with the exception of BlackRock, which has a commanding lead, especially in the equity space.


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 £3.3bn, followed by Janus Henderson (£2bn) and Ninety One (£2bn). Equities dwarf all other Article 9 allocations, and it’s no surprise that this is reflected in the dominant equity funds that are making the running with these managers.



Users of Lipper for Investment Management can now identify whether funds are categorised as Article 6, 8, 9, or not reported, filtering by domicile, asset class, promoter, fund category, and many other criteria.

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


This article was originally published in The Review, the Journal of the Chartered Institute for Securities & Investment 


Refinitiv Lipper delivers data on more than 330,000 collective investments in 113 countries. Find out more.

The views expressed are the views of the author and not necessarily those of Refinitiv. This material is provided as market commentary and for educational purposes only and does not constitute investment research or advice. Refinitiv cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided in this publication or from any other source mentioned. Please consult with a qualified professional for financial advice.

Article Keywords , , , ,

Get In Touch


We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.×