Sustainable Investment Targets and Investor Behaviour: Evidence from the SFDR Framework, the Great Reclassification, and Implications for SFDR 2.0

The Sustainable Finance Disclosure Regulation was designed as a transparency framework but the market used its Articles 8 and 9 as sustainability labels. In November 2025 the European Commission proposed to replace them with product categories subject to a minimum threshold of 70% of assets invested in line with the sustainability strategy each product declares. This thesis examines whether that threshold is consistent with the targets that are currently declared by European funds. Using Lipper data extracted from LSEG Workspace on Article 6, 8 and 9 funds domiciled in the EU and EEA, it compares declared minimum proportions of sustainable investments with the proposed threshold and with the proportions actually held by funds. Most Article 9 funds already exceed 70%, while Article 8 funds declare a median target of 20%, and not many funds fall between the two levels. At the same time, Article 8 funds report a median realised share of 49%, and more than a third of them do not report any target at all. For a significant share of funds, the distance from the proposed threshold seems to reflect reluctance of managers to take on binding commitments rather than composition of their portfolios. The same pattern emerges from the analysis of three of the largest asset managers in the market which downgraded their Article 9 funds during the Great Reclassification of 2022: Amundi, BlackRock and DWS. These results suggest that a higher threshold on a self-declared metric may lead funds to move towards less demanding categories, as happened in 2022, rather than redirect capital towards sustainable assets.