top of page
  • Deborah

Sustainability-related disclosures in the financial services sector (SFDR) became applicable last March 2021, requiring a statement with respect to Principal Adverse Impacts (PAIs) that investment decisions have on environmental and social sustainability factors. A financial market participant (FMP) that does not consider adverse impacts of investment decisions on sustainability factors must clearly explain why it does not do so and whether / when it intends to.


To gather information after the first year, the European Supervisory Authorities (ESAs) conducted a survey of National Competent Authorities (NCAs) to understand the state of voluntary disclosures published by FMPs below the 500-employee threshold and identify best practices.


Overall, information on disclosures is easy to find. However, the survey revealed a low level of disclosure pertaining to the degree of alignment with the Paris agreement objectives, including vague descriptions.


The Report released on July 22 highlights various examples of disclosures and provides examples of best practices, including:

  • High visibility of disclosures

  • Clarity of descriptions concerning PAI and reasoning


The Report includes ESAs recommendations on how NCAs should monitor the compliance of FMPs and financial advisers with the requirements of SFDR, namely:

  • Continuous market observation to identify FMPs that are not compliant with the voluntary disclosures

  • Provision of greater sample size and more details in reporting figures to allow representativity

  • Regular surveys to monitor / determine effective compliance

  • Offsite inspections of non-compliant FMPs

  • Use of IT and / or other SupTech tools to facilitate the assessment of compliance with the mandatory disclosure

Recent Posts

See All

Information, Communication Technology (ICT) systems, generally includes all hardware, software, applications and systems that combined enable people and organizations to communicate digitally. ICT enc

25 January 2023 - Comments requested on Financial Conduct Authority (FCA) proposed Sustainability Disclosure Requirements (SDR) and investment labels. 6 February 2023 - Comment period closes for the u

Last November, 2022 the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO) published their Level 3 assessment of cyber resilience on 37 Finan

bottom of page