SFDR PAI Reporting: ESAs Publish Good And Poor Practices

In the second annual report on principal adverse impact (PAI) disclosures, the ESAs detail good and poor practices for both product (Article 7) and entity-level (Article 4) reporting.

Good and poor practices

At the end of September, the ESAs published their findings from an April/May 2023 review of PAI disclosures. A summary of the ESAs' findings, including good and poor practices identified, is set out below.

• PAI due diligence policy disclosures: policy disclosures remain extremely limited. The ESAs' cited as poor practice the disclosure of participation in sustainability-related international organisations and initiatives (e.g. Net-Zero Asset Owner Alliance, Climate Action 100+, Principles for Responsible Investments).
  • Good practice: DD policy disclosures detailing the strategies adopted for identifying and weighting key PAIs and the organisational policies and procedures assigning responsibility for implementation of those strategies.