The European Securities and Markets Agency (ESMA) this week
published a Commission Decision and Annex containing a set of
answers on the Sustainable Finance Disclosure Regulation ((EU)
2019/2088) (SFDR) and the Taxonomy Regulation ((EU) 2020/852),
which the European Commission adopted on 13 May 2022. The answers
are to a series of important questions raised by ESMA in a document
published on 13 May 2022. The Commission has generally given
clearly reasoned answers to the questions, although a number of
uncertainties still remain. The following are the key areas of
interest for private fund sponsors that are in scope of SFDR.
Can firms make PAI disclosure for specific funds only,
having opted out at firm level? SFDR requires larger firms
(firms with more than 500 employees) to measure and report on
principal adverse impact ("PAI") factors in their
investment portfolios. For smaller firms, there has been no clear
route for them to consider PAI factors only in relation to
