ESG: Commission publishes revisions to its earlier Q&As

As we reported last week, on 14 April 2023, the European Commission published a further set of Q&As on the SFDR, this time in response to the European Supervisory Authorities' (ESAs) questions submitted on 9 September 2022.

This is the latest of a number of documents regarding interpretation of the SFDR:

• on 17 November 2022, ESMA published a series of Q&As on the SFDR Level 2 RTS

• on 2 June 2022, the European Supervisory Authorities (ESAs) published clarifications on key areas of the draft RTS under SFDR

• on 17 May 2022, the Commission published a series of Q&As in response to issues of interpretation raised by the ESAs on 10 December 2021

• on 26 July 2021, the Commission published a series of Q&As in response to the ESAs' questions of 7 January 2021. (A corrigendum dated 23 November 2021, corrected the order of Q's 1 and 2).

At the same time as its new Q&As, the Commission published a second annex, containing certain changes to the answers it had previously given, as follows:

Commission decision of 6 July 2021 (published on 26 July 2021)

The Commission's new answer affects the question on sustainable finance disclosures which starts at page 4 of the Commission's Q&As of 6 July 2021.

The revisions largely consist of tidying up citations and tweaking the language used without altering its meaning.

However, two more substantial changes are also made:

• in the section headed "Design of financial products subject to Article 9", the Commission underlines that its "replies to Q1 of Q&As of March 2023 clarify that the SFDR does not prescribe a single methodology to account for sustainable investments", while

• the section headed "The objective of 'a reduction in carbon emissions" is deleted in its entirety.

Commission decision of 13 May 2022 (published on 17 May 2022)

The Commission's new answer affects the question on taxonomy-alignment disclosures which starts at page 9 of the Commission's Q&As of 13 May 2022

As above, the revisions largely consist of tidying up citations and tweaking the language used without altering its meaning.

However, the Commission's original answer referred to the scope of recital 21 of the Taxonomy Regulation insofar as they apply to "undertakings that are not subject to [the Taxonomy Regulation]".

The revised answer reorders some of the text of the original (without altering its meaning), while also clarifying that the recital should be taken to refer "both to undertakings that do not fall under the scope of that Regulation, and undertakings that are not yet required to disclose information under that Regulation at a given point in time".