What is the difference between Article 6, 8, and 9?

Article 6 products do not promote sustainability characteristics and only disclose how sustainability risks are integrated. Article 8 ('light green') products promote environmental or social characteristics. Article 9 ('dark green') products have sustainable investment as their explicit objective. The bar rises from disclosure-only to active promotion to a sustainability mandate.

Does an Article 9 fund have to be 100% sustainable investments?

In practice, yes. Following ESMA and Commission Q&A guidance, an Article 9 product is expected to invest only in sustainable investments, aside from cash held for liquidity and assets used for hedging. Anything materially below that points to Article 8 rather than Article 9.

What does 'do no significant harm' (DNSH) mean here?

DNSH requires that an investment counted as 'sustainable' does not significantly harm any other environmental or social objective, assessed using mandatory PAI indicators. Both Article 8 (for its sustainable sleeve) and Article 9 products must apply the DNSH test to those investments.

Whether you consider principal adverse impacts at product level is a disclosure choice, but it strongly signals classification. Article 9 and most credible Article 8 products consider PAIs. Large managers (over 500 staff) must also report PAIs at entity level on a comply-or-explain basis.

Is this classification legally binding?

No. SFDR classification is the manager's own responsibility and must be substantiated in pre-contractual and periodic disclosures and reflected accurately in the prospectus. This tool is an informational triage aid only; confirm with legal and compliance before labelling any product.

What is the SFDR Product Classification Checker?

Answer questions about sustainability integration, principal adverse impact (PAI) consideration, the share of sustainable investments, and 'do no significant harm' safeguards to classify a financial product as SFDR Article 6, 8, or 9. For asset managers and ESG compliance teams. Runs in your browser. It runs free in your browser on Gera Tools, with nothing uploaded.

SFDR Product Classification Checker

Name: SFDR Product Classification Checker
Creator: Gera Tools
License: https://creativecommons.org/licenses/by/4.0/

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The EU Sustainable Finance Disclosure Regulation (SFDR) sorts financial products into three disclosure regimes. Getting the article right matters for marketing, pre-contractual disclosures, and greenwashing risk. This checker applies the core decision logic so you can triage a product before formal classification.

The three articles at a glance

SFDR uses a traffic-light language that has become shorthand across the industry:

Article 6 (“grey”): the product integrates sustainability risks into its investment process but makes no environmental or social promotion claims. Discloses how sustainability risks are considered.
Article 8 (“light green”): the product promotes environmental or social characteristics as part of its strategy — for example, maintaining a minimum ESG rating or excluding high-emitters. May also include a sleeve of sustainable investments.
Article 9 (“dark green”): sustainable investment is the explicit primary objective. Regulatory guidance (ESMA Q&A) effectively expects ~100% of assets to be classified as sustainable investments, aside from cash held for liquidity and hedging instruments.

The classification decision tree

The logic runs top-down:

1. Is sustainable investment the primary objective?
   → AND does DNSH apply to all holdings?
   → AND are governance standards screened?
   → AND is the sustainable investment share ~100%?
        YES to all  →  Article 9
        PARTIAL     →  Article 8 (cannot credibly claim Article 9)

2. Does the product promote E/S characteristics?
   → AND does DNSH apply to any sustainable investment sleeve?
        YES  →  Article 8

3. Neither above?  →  Article 6

Key concepts: PAI, DNSH, and sustainable investment

Sustainable investment has a specific SFDR definition: an investment in an economic activity that contributes to an environmental or social objective, does not significantly harm any other objective (DNSH), and follows good governance practices. Asset managers must substantiate how each holding meets all three legs.

Do No Significant Harm (DNSH) requires that counting an investment as “sustainable” does not significantly harm any other environmental or social objective. The SFDR Regulatory Technical Standards (RTS) set mandatory and additional Principal Adverse Impact (PAI) indicators — covering greenhouse gas emissions, biodiversity impact, water, waste, and social indicators — which feed the DNSH assessment.

PAI reporting is a product-level disclosure choice for most managers, though managers with more than 500 employees must report entity-level PAI statements on a comply-or-explain basis.

Worked example: when Article 9 becomes Article 8

A global equity fund declares “sustainable investment” as its objective, but only 30% of holdings formally meet the sustainable investment definition. Even if DNSH and governance checks apply to those 30%, the remaining 70% are uninvestigated under the SFDR framework. ESMA and Commission guidance require the whole portfolio (bar liquidity) to meet the sustainable investment definition for a credible Article 9 label. The checker flags this discrepancy and outputs Article 8. The fund can retain its ESG strategy but must re-label pre-contractual documents to reflect Article 8 and adjust marketing language accordingly.

Classification is the asset manager’s own responsibility and must be substantiated in the pre-contractual and periodic SFDR templates. This tool is an informational triage aid only.