The ESAs publish a new Q&A on the SFDR Delegated Regulation


The European Supervisory Authorities (the ESAs) have published a new questions and answers (Q&A) on the SFDR Delegated Regulation (Commission Delegated Regulation (EU) 2022/1288) (the Delegated Regulation).

This Q&A gives further clarity on a few key topics, while answering to some of the questions by cross-referencing to their clarification document published in June 2022:

  • The current value of all investments in principal adverse impacts (PAI) and Taxonomy-aligned disclosures, including inter alia:
    • clarifications on the meaning of “current value” and “all investments”;
    • clarifications on PAI calculations and Taxonomy-alignment calculation; and
    • the ESAS’ views on the incorporation of short positions within the PAI indicators.
  • PAI disclosures, including notably:
    • additional guidance on the lack of available data for PAI indicators;
    • concrete examples of calculation accompanied by a useful table; and
    • clarifications on the scope of the disclosures under Article 4(1)(a), 4(3) or 4(4) SFDR.
  • Financial product disclosures, with notably:
    • a confirmation on the removal of certain sections from the SFDR template that are deemed not relevant;
    • clarifications on whether a single financial market participant (FMP) may apply different interpretations of “sustainable investments” to different financial products that it offers; and
    • a confirmation that the “designated index” referred to in Article 9(1)(a) or (b) cannot be a broad market index.
  • Multi-option products, including amongst others:
    • a confirmation that hyperlinks are only allowed for pre-contractual disclosures under Article 20(5) and 21(5) of the Delegated Regulation, but not for period disclosures; and
    • clarifications on the application of provisions regarding “underlying investment options” to portfolio management products.
  • Taxonomy-aligned investment disclosures, notably encompassing:
    • a useful decision tree on the situations under which pre-contractual and periodic Taxonomy-alignment disclosures apply;
    • clarifications on the use of environmental controversies as suitable proxy for “Do No Significant (DNSH);
    • clarifications regarding activities that qualify as Taxonomy-aligned and at the same time contribute to another environmental and/or social objective; and
    • clarifications on the use of KPIs to measure the positive contribution for sustainable investments.
  • Financial advisers and execution-only FMPs, including inter alia:
    • clarifications on the application of the rules for financial advisers to financial advisers carrying non-advised/execution only sale.