ESG: Simmons client note on updated Consolidated Q&As on the SFDR

On 25 July 2024, ESMA published an updated version of the Consolidated Q&A document on SFDR and the SFDR Regulatory Technical Standards (RTS). 

The Q&A document sets out various technical clarifications and interpretations of the SFDR regime.

Our new client note guides firms through what we consider to be the most important points that arise from the new answers provided.

What does the new Q&A document contain?

It includes sixteen new questions on a range of topics including PAI metrics, Taxonomy-alignment and sustainable investments calculations, and scoping issues. 

The new Q&As supplement and sit alongside the existing Q&As, which remain in place. 

For the most part, the new Q&As are uncontroversial technical clarifications and, in some cases, are actively helpful.  A couple of the answers, however, are potentially unexpected and something of a curve-ball. In particular, firms should note what the Q&As say about:

• Taxonomy-alignment calculation;
• Definition of sustainable investments;
• Remainder investments for Article 9; and 
• The good governance test for asset-holding SPVs.

The Simmons client note

Our client note summarises the key takeaways from the Q&A, focussing on those questions which we consider to be most important to the industry, re-ordered around key themes, rather than following the specific order of the Q&A. 

For certain questions, we have added additional commentary.

Our client note assumes a working familiarity with the current SFDR regime and with the Q&As. 

For more general information on SFDR, please see our ESG notes for clients.