On July 25, the Joint Committee of the European Supervisory Authorities (ESAs) released an updated Q&A document that consolidates guidance from the ESAs and the European Commission on the implementation of the Sustainable Finance Disclosure Regulation (SFDR).
The updated document provides clarifications on several key areas, including:
Calculating and Disclosing Principal Adverse Impacts (PAI) Indicators: Detailed methods for calculating and reporting various PAI indicators.
Currency Conversion for Reporting: Guidelines on converting different currencies into Euros for reporting purposes.
Eligibility for SFDR “Article 9” Products: Criteria for determining which investments qualify for hedging or liquidity purposes under SFDR “Article 9” products.
Measuring Sustainable Investments: Instructions on how to measure sustainable investments at both the economic activity and investment levels, including examples of sustainable investment calculations.
Responsibility Allocation in Delegated Management: Clarifications on how responsibility for compliance with the definition of sustainable investments is allocated when management is delegated or when a product passively tracks an index.
Special Cases: Guidance on treating unique situations such as investments in other financial products, those applying Paris-Aligned or Climate Transition Benchmark requirements without direct tracking, or investments in real assets through special purpose vehicles or holding companies.
Source: ESMA Q&A on SFDR
