Swedish Equity Funds are Too Hot

With the implementation of SFDR in March 2021, and as markets mature, sustainable funds have come under increasing scrutiny, as investors seek sort the wheat from chaff and find the right right sustainable investment vehicles. Following an initial adjustment and advisory process, regulatory authorities started to apply pressure on fund managers to ensure accurate reporting. As we reported before, Swedish and Danish financial services authorities (FSAs) as well as ClarityAI have warned fund managers about their sustainability claims. In the start of the year we witnessed a flurry of SFDR fund downgrades from Article 9 to article 8.

Now, more evidence has surfaced that fund managers, at least in Sweden, are not doing enough. According to a recent staff memo from Riksbanken, the Swedish central bank, published by advisor Cristina Cella, mutual funds in the country are, on average, aligned with a temperature increase of 2.77°C, well above the upper limit of 2°C set out in the Paris Agreement.

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