Social Indicators in ESAs’ Final Draft Standards for SFDR

The three European Supervisory Authorities (ESAs) have published their final report containing the draft Regulatory Technical Standards (RTS) for the Sustainable Finance Disclosure Regulation (SFDR). The European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA) have extended the social principal adverse impact (PAI) indicators as well as introduced financial product disclosures of greenhouse gas (GHG) emission reduction targets. Technical amendments to the SFDR Delegated Regulation also form part of the proposal, with the ESAs proposing enhanced disclosure of how a fund’s sustainable investments comply with the do no significant harm principle. The European Commission, which mandated the draft RTS in April 2022, now has three months to review the report and decide whether to approve the changes. No clear date has been set for the implementation of the proposed requirements. “These draft RTS would be applied independently of the comprehensive assessment of SFDR announced by the European Commission in September 2023 and before changes resulting from that assessment would be introduced,” the ESAs said.

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