SFDR continues to drive flows and the transition of non-ESG funds towards ESG (Article 8 and 9) funds as managers find it increasingly difficult to market Article 6 (non-ESG) funds in Europe. Contrary to headlines highlighting trends in downgrades of funds from Article 9 to 8, Goldman Sachs Research analysts see more upgrades from Article 8 to 9 funds vs. their prior assessment. Improver / transition funds are emerging as differentiated strategies amidst the crest of Article 8 / 9 penetration. Given nearly all assets are moving towards Article 8 and 9 funds in Europe, GS Research analysts see an overly strict interpretation of SFDR risks exacerbating a ‘Divestment Dilemma’ – GS Research analysts share their latest views and interpretations of SFDR and establish a framework for ‘Sustainable Investments.’