The funds industry has moved fast to embrace Europe’s sustainable investing regulations, seeing it as a quality label for products.

But clients care less about article numbers and more about aligning portfolios with the Paris Agreement or social values.

This was the view expressed by M&G European distribution head Micaela Forelli, at Citywire’s recent flagship Berlin event.

She was one of several senior figures in European fund distribution who Amplify had the chance to speak to at the event.

We asked them a few questions.

What were the positives to come out of 2022? (Yes, there were some.)

What do they expect the biggest challenges and opportunities will be in 2023?

And the question posed in this video: Do European fund selectors really demand that their funds are Article 8?

(Pause for crib sheet reminder: Under the EU’s Sustainable Finance Disclosure Regulation, Article 8 funds are obliged to consider sustainability in a binding way; Not to be confused, of course, with Article 9 funds, which must have a sustainable objective.)

In the first of three videos we hear from:

• Steven DeVries head of wholesale distribution for the UK, Europe and Latin America at Legal & General Investment Management;
• Micaela Forelli, head of European distribution at M&G;
• Richard Garland, head of Ninety One’s global advisor business; and
• Gabriele Miodini, head of international business development at Eurizon Capital.

So, are clients demanding Article 8 funds? Who better to ask than the clients themselves?

Citywire polled European fund selectors ahead of its biggest events this year, including Berlin which took place this month. Between 45- 51% across the three events they attended said they were ‘totally open-minded’ when it came to whether funds were Article 8. See our chart below.

This claim, that they have ‘no limits or targets’ might seem out of kilter with some fund groups’ rush to launch or reclassify products under those categories.

Indeed, other senior distribution speakers in our film very much feel that Article 8 or 9 funds are becoming the new benchmark. Money is flowing into those funds, they say. And while characterising their own group’s transition to Articles 8 and 9 as more cautious than some others, the direction of travel is clear.

That 3% who said they ‘don’t know what 8 or 9 means’ (maybe they need our crib sheet?) might seem surprising. But Forelli had sympathy with that view. ‘Clients want to be told what their portfolios are doing in practical terms towards those E, S and G targets.’

Miodini had a similar view. While it is still a case of groups pushing the idea of Articles 8 or 9 to clients, this is fine – so long as asset managers can chuck in some simple explanation of what it all means.