SFDR Article 9's interpretation just got a lot easier.
The European Supervisory Authorities (ESA) published the answers of the European Commission to the questions raised in September 2022.
Here are the main takeaways:
- The Commission rejects the definition of specific criteria to define what can be considered a sustainable investment and lets each actor determine how they contribute to an environmental and/or social objective.
- GHG emissions reductions can be a sustainable investment objective for Article 9 funds as well an environmental characteristic for Article 8 ones.
- Investors must provide transparent access to the methodology they use to define their sustainable investment objectives and the contribution of their investment to their environmental or social targets.
- They also have to provide access to justifications regarding why their investments do not significantly harm another sustainability objective and why their portfolio companies meet the requirements for good governance practices.
- Investors reporting on PAI have to both measure them and communicate on the procedures set up to mitigate their adverse impact.
The Commission also amended their previous answers to questions published in 2021 and 2022 to clarifying the distinction between Article 8 and 9 funds as well as the use of assessments and estimates for companies both not in scope or not yet reporting under CSRD/Taxonomy Regulation.