Recommandation AFG – Principes de définition cadre de l’investissement durable selon SFDR

The AFG has provided [recommendations](https://www.afg.asso.fr/wp-content/uploads/2023/04/note-si-v2023-fr-vf.pdf) for defining sustainable investments in accordance with the SFDR regulation.
As a reminder, the SFDR Regulatory Technical Standards (RTS) came into effect on 1 January 2023, and require the disclosure the sustainable investment quota of a financial product. However, the general definition of sustainable investment in SFDR has led to varied interpretations among stakeholders. Thus, the AFG and its members have recommended principles for defining sustainable investments to ensure more convergence and aid in the application of the definition.
The AFG recommends considering a company sustainable as a whole when it is identified as „active“ and/or „committed“. To be considered active, a company should align with the taxonomy or make a positive contribution to the issues listed by the SFDR regulation using a commonly accepted analytical framework such as that of the United Nations SDGs. On the other hand, being committed means having a measurable and enforceable commitment, such as a company’s commitment to the transition measured by its current or projected investments and progress monitoring by the AMC, which has an escalation procedure.
Furthermore, the AFG suggests taking into account various non-cumulative elements to define a company’s contribution to an environmental or social objective. These include the share of forecast revenue, CapEx and/or Opex contributing to an environmental or social objective, a company’s commitment to transition, and any other quantitative element that enables assessing a company’s contribution to an E or S objective. The AFG also emphasizes the principle of DNSH to any of these objectives and the importance of good governance practices in the companies where investments are made. Finally, the AFG urges management companies to be transparent about their methodology and the threshold at which a company is considered sustainable in its entirety.