SFDR: ESAs raise further queries with the European Commission

On 9 September 2022, the European Supervisory Authorities (the “ESAs”) sent a list of additional queries relating to the interpretation of the Sustainable Finance Disclosure Regulation (the “SFDR”) to the European Commission (the “Commission”) (here).

A number of clarifications on the interpretation of the SFDR have already issued from the ESAs and the Commission, most recently in May and June of this year. These earlier clarifications are summarised in our briefing here.

The additional queries now raised by the ESAs relate to:

  • the definition of “sustainable investment” under Article 2(17) of the SFDR and how it applies to investments in funding instruments that do not specify the use of proceeds, such as the general equity or debt of an investee company;
  • how “investment in an economic activity that contributes to an environmental objective” or “investment in an economic activity that contributes to a social objective” in Article 2(17) of the SFDR should be interpreted;
  • the interpretation of Article 9(3) of the SFDR (relating to carbon emissions reductions and benchmarks);
  • how “consider” in Article 7(1)(a) of the SFDR, which refers to how a financial product “considers” principal adverse impacts (“PAI”) on sustainability factors, should be interpreted;
  • how the 500 employee PAI threshold referenced in Articles 4(3) and 4(4) of the SFDR should be understood (in particular, whether this threshold includes workers assigned to a financial market participant (“FMP”) who are employed by a third party); and
  • whether in scope FMPs should provide a quarterly (subject to applicable exemptions) periodic report based on the SFDR templates for portfolio management, or whether those FMPs may use one of the quarterly reports to present a yearly report based on the relevant templates.


The additional queries raised by the ESAs are to be welcomed and we hope that the Commission’s responses will provide clarity for FMPs in the context of seeking to comply with the SFDR. We will continue to monitor this space and provide an update once the Commission’s responses are available.

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.