SFDR Level 2 Revisions 5 Key Impacts

On 4 December 2023, the European Supervisory Authorities (ESAs) published regulatory technical standards (RTS) amending the existing SFDR delegated measures (Level 2).

The RTS are now subject to a three-month scrutiny period before being adopted as Level 2 revisions by the Commission. Current estimations are for the revisions to be adopted with an application date in H1 2025.

The following are five key impacts of the RTS for fund management companies.

1. Amended Principal Adverse Impact Indicators, Disclosures and Calculations

Amended list of indicators

The mandatory principal adverse impact (PAI) indicators, set out in Table 1, Annex I of Level 2 and which are always considered to indicate an adverse social or environmental (E/S) impact of an investment, have been extended to include new indicators for investments in tobacco producers (PAI 15), companies with employees earning less than the adequate wage (PAI 16), and companies with significant activities