ESAs Provide Further Guidance on the Application of SFDR

On 24 March 2022, the EBA, ESMA and EIOPA (together, the “ESAs”) updated their joint supervisory statement on the application of the Sustainable Finance Disclosure Regulation1 (“SFDR”) (the “Statement”) here. The Statement replaces an earlier statement of the ESAs relating to the application of SFDR issued in February 2021.

As highlighted in our earlier briefing here, the application of the SFDR regulatory technical standards2 (“RTS”) has been delayed until 1 January 2023. The Statement is intended to provide guidance to financial market participants and financial advisers on the application of SFDR in the interim period prior to application of the final RTS (the “Interim Period”).

Key aspects of the Statement

The Statement sets out supervisory expectations in respect of:

  • Taxonomy-aligned product disclosures (Articles 5 and 6 of the Taxonomy Regulation3)

    The ESAs confirm that, in order to comply with the requirement pursuant to Article 5(b) of the Taxonomy Regulation to disclose to what extent the investments underlying the financial product are in economic activities that qualify as environmentally sustainable for the purposes of the Taxonomy Regulation, an explicit quantification should be provided by way of numerical disclosure as a percentage of the extent to which investments underlying the financial product are taxonomy-aligned.

    The Statement also clarifies that estimates should not be used. Where information is not readily available from public disclosures by investee companies, the ESAs state that financial market participants may rely on equivalent information obtained directly from investee companies or from third party providers.

    The ESAs also confirm that the numerical disclosure referenced above may be accompanied by a qualitative clarification explaining how the financial product addresses the determination of the proportion of taxonomy-aligned investments of the financial product (for example, by identifying sources of information used to make that determination). The ESAs state that this clarification should be clear about the taxonomy-alignment of the investments underlying the financial product and should not disclose more information than is required by Article 5 of the Taxonomy Regulation.
  • Reference to draft RTS

    The Statement provides that national competent authorities are encouraged to refer financial market participants and financial advisers to the requirements set out in the draft RTS during the Interim Period. The ESAs confirm that the draft RTS can be used as a reference for the purposes of applying the provisions of Articles 2a, 4, 8, 9, 10 and 11 of the SFDR and Article 5 and 6 of the Taxonomy Regulation. Notwithstanding the foregoing, financial market participants and financial advisers should note that the ESAs acknowledge that the draft RTS may be subject to amendment.
  • Application timelines

    The Annex to the Statement provides for a useful summary of both the entity-level and product-level disclosure requirements under SFDR, together with the SFDR and associated RTS application timelines.


Financial market participants and financial advisers should take note of the contents of the Statement to ensure compliance with same during the Interim Period.

  1. Regulation (EU) 2019/2088.
  2. Draft RTS of 2 February 2021 here and 22 October 2021 here.
  3. Regulation (EU) 2020/852.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.