[ESMA22-1669215091-5374 ] SMSG advice to the ESA’s Joint Consultation Paper on Review of SFDR Delegated Regulation

The SMSG provided advice to ESMA on the Joint Consultation Paper regarding the Review of SFDR Delegated Regulation on PAI and financial product disclosures. The SMSG expressed concerns about potential discrepancies arising from the draft Delegated Act on ESRS and called for alignment to limit reporting burden on investee companies.
There were differing opinions on the inclusion of new social PAI indicators, with some advocating for immediate inclusion and others suggesting to wait until inconsistencies in the Level 1 legislation were resolved. The SMSG preferred a unified approach treating derivatives the same as net long exposures in sustainability and PAI calculations.
The group supported the use of quantitative PAI thresholds but not mandatory thresholds for each indicator. Transparency on PAI-based DNSH criteria was deemed essential, but there were varied views on the need for mandatory disclosure of quantitative thresholds.
The SMSG highlighted the importance of consistency and transparency in the treatment of derivatives across different financial products and advocated for systematic approaches. The group provided specific feedback on indicators, methodologies, and reporting requirements to enhance the effectiveness and clarity of the SFDR Delegated Regulation.