European Commission responds to ESAs on SFDR

On 14 July 2021, the European Commission replied to a list of questions on the interpretation of the Sustainable Finance Disclosure Regulation (SFDR). These questions were asked by the European Supervisory Authorities (ESAs - ESMA, EBA and EIOPA) to the European Commission in their joint letter of 7 January 2021.

The ESAs raised questions such as:

• Does the provision of SFDR apply to non-EU AIFMs and registered AIFMs?
• How should you apply the 500-employee threshold for principal adverse impact (PAI) reporting on parent undertakings of a large group?
• What is the meaning of “promotion” in the context of products promoting environmental or social characteristics?
• The naming conventions for Article 8 and Article 9 investment products.
• Application of Article 9 of SFDR.
• Application of SFDR product rules to MIFID portfolios and other dedicated funds.

Although the response of the European Commission contains helpful clarifications and explanations, it is generally felt that not all questions have been fully addressed.

The Q&As can be found here.

The EU Commission’s decision is here and the letter to the ESAs can be found here.