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ARTICLE · 11 JULY 2023

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New Taxonomy/SFDR FAQ

William Fry LLP
William Fry LLP
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William Fry LLP

William Fry LLP

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The package includes a Commission FAQ clarifying the tests for Taxonomy-aligned investments and SFDR sustainable investments.

IrelandInternational Law
James Phelan
James Phelan
Nessa Joyce
Nessa Joyce
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Last month saw the publication of yet another extensive and highly impactful EU package of sustainable finance measures.

The package includes a Commission FAQ clarifying the tests for Taxonomy-aligned investments and SFDR sustainable investments.

Taxonomy clarifications

For an investment in an economic activity to qualify as Taxonomy aligned, the activity must satisfy the four criteria of (i) contributing substantially to one or more of the Taxonomy's environmental objectives (ii) not significantly harming any of those objectives, (iii) complying with minimum safeguards and (iv) complying with the relevant Taxonomy technical screening criteria.

The FAQ clarifies that the minimum safeguards at (iii) above are met when investee companies implement due diligence and remedy procedures to ensure their activities align with the OECD guidelines for Multinational Enterprises (MNE Guidelines), the UN Guiding Principles on Human Rights (UNGP) and do not significantly

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