ESG – client note on important SFDR Q&As published by ESMA

On 17 November 2022, ESMA published an extensive set of new Questions & Answers (Q&A) in respect of the EU Sustainable Finance Disclosure Regulation (SFDR) and its Regulatory Technical Standards (RTS).

The Q&A is immediately effective.  There is no implementation period or transitional period and is applicable to all firms subject to SFDR (although some parts of the Q&A may not in practice be relevant).

A firm which is subject to any of the in-scope regimes will need to engage closely with the Q&A, and update its approach to SFDR if there is any material divergence between the firm's current viewpoint and the guidance in the Q&A.

While the Q&A is ostensibly related to the RTS, several of the questions relate to the SFDR Level 1 regulation and the Taxonomy.  The primary focus areas are:

• the PAI disclosure regime (under Article 4 SFDR, and Part II and Annex I of the RTS)
• the Taxonomy alignment calculation (under articles 15 and 17 of the RTS)
• pre-contractual and periodic disclosures for Article 8/9 products (under Annexes II to V of the RTS)
• certain other SFDR scoping and application points.