Consolidation of questions and answers on the SFDR
On 25 July 2024, the European Banking Authority (“EBA”), European Securities and Market Authority (“ESMA”) and the European Insurance and Occupational Pension Authority (“EIOPA”), published a consolidated questions and answers on the SFDR and SFDR Delegated Regulation (“Q&As”). The new version includes not only clarification on scope issues and definitions of sustainable investments but also fifteen new questions and answers.
Noteworthy updates of certain Q&As
Among the newly added questions, below are the main ones:
AIFMs must make Article 10 SFDR information available on a website
Section I, question 4 indicates that financial products categorised as Article 8 or 9 SFDR and made available by a registered AIFM must publish information on those financial instruments on a website. The website may belong to the financial product itself or to the group to which the registered AIFM belongs to. If neither is available a new website must be established, allowing the registered AIFM to comply with Article 10 SFDR.
Exposure to companies active in the fossil fuel sector – calculating the PAI indicator 4
Section IV, question 26 clarifies that companies are deemed to be active in the fossil fuel sector when they “derive any revenues from exploration, […] of fossil fuels […]”, in accordance with point (5) of Annex I of the SFDR Delegated Regulation. As such the calculation of the PAI (Principal Adverse Impact) indicator 4 is to be performed on a pass/fail basis (and not on a look-through approach); and a company is considered to be active in the fossil fuel sector as soon as it derives any revenues from any of the activities mentioned in the definition.
Disclosure of the energy consumption intensity per high impact climate sector – PAI indicator 6 to be disclosed on an aggregated basis for all investments or should each high impact climate sector be disclosed separately?
Section IV, question 27 confirms that Table 1, Annex I of the current SFDR Delegated Regulation does require separate disclosures for each high impact climate sector (on an aggregated basis for each high impact sector). The calculation to be performed so that each high impact sector is aggregated and disclosed separately.
Calculating the exact share of sustainable investment that qualifies as environmentally sustainable under EU Taxonomy
Section V, question 20 presents an accurate illustration as to how calculations for EU Taxonomy-alignment should be made under the pre-contractual template (Annexes II and III) and the periodic disclosures (Annexes IV and V).
Disclosure on financial products passively tracking benchmarks
Section V, question 25 clarifies that the disclosure obligation applicable to financial products in the SFDR Delegated Regulation applies equally to financial products passively tracking Paris-aligned Benchmark or Climate Transition Benchmark.
SPVs following good governance practices
Section V, question 27 confirms that funds investing in assets such as car or real estate through Special Purpose Vehicules are not considered as “investee companies” for the purposes of the SFDR and are therefore not compelled to comply with the good governance checks under Article 8 SFDR.
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