Higher US Employment Litigation Risk for Article 8 and 9 SFDR Fund Portcos

The EU law’s operational stipulations for sponsors could prove to be a double-edged sword at the portfolio company level — especially during Trump 2.0.

Managers of Article 8 and 9 funds under the European Union’s Sustainable Finance Disclosures Regulation by law have to be embedded in the operational day-to-day of their portfolio companies in order to assure compliance with ESG goals.

Thus far, this has mainly been a net positive for activists hoping to strengthen good governance and mitigate adverse impacts at the portfolio company level, especially when it comes to diversity and equal opportunity employment law.