The Joint Committee of the three European Supervisory Authorities (ESAs) has issued its second annual report on voluntary disclosure progress on principal adverse impacts (PAI) under Article 18 of the Sustainable Finance Disclosure Regulation (SFDR). Building upon their approach from the previous year, the ESAs – European Banking Authority (EBA), European Insurance and Occupational Pensions Authority and (EIOPA), and European Securities and Markets Authority (ESMA) – conducted a survey involving national competent authorities to assess the status of voluntary PAI disclosures at entity and product levels under SFDR. The findings offer an initial look into best practices and areas requiring improvement. The report highlights an overall improvement in compliance and disclosure quality compared to the previous year, albeit with notable variations across financial market participants and jurisdictions. Further, disclosures were found to be more accessible on websites compared to the prior year. Financial market participants who choose not to consider PAIs are urged to provide clearer explanations for their decision. Further, despite encouragement under SFDR, these participants are generally failing to disclose the extent to which their investments align with the Paris Agreement’s goals. The report promises further analysis of voluntary PAI disclosures by financial products in future iterations. It also offers a series of recommendations to the European Commission for consideration before the next comprehensive assessment of SFDR.