Three explanatory notes regarding key topics across the EU Sustainable Finance framework

ESMA has published three explanatory notes regarding key topics in the Sustainable Finance framework across the EU, covering the definition of sustainable investments, the application of the „DNSH“ requirements, and the use of estimates. The explanatory notes aim to provide factual information on these concepts, aiding stakeholders in navigating the Sustainable Finance legislative framework.
The key concepts discussed include the use of estimates in the context of the EU Taxonomy, SFDR, and BMR. The notes provide insights into how estimates can be applied in specific situations, such as when relevant information is not readily available, and outline the conditions and disclosures associated with their use.
Additionally, the notes cover the DNSH principle, a key element in various Sustainable Finance regulations, explaining the requirements under the EU Taxonomy, SFDR, and BMR. The DNSH principle involves assessing whether economic activities significantly harm environmental objectives and includes specific criteria for sustainable investments. The documents also highlight transparency requirements for financial products under SFDR, including disclosures related to DNSH and the consideration of PAI indicators.
Finally, the notes delve into the concept of sustainability in the EU Taxonomy and SFDR frameworks, explaining how sustainability is defined and assessed for economic activities. This includes criteria for environmentally sustainable investments and the use of technical screening criteria to determine alignment with environmental objectives.