500 employee principal adverse impact (PAI) threshold: For the purposes of Articles 4(3)-
4(4) SFDR, should “the average number of 500 employees” be understood to include
workers who are assigned to t

Question

500 employee principal adverse impact (PAI) threshold: For the purposes of Articles 4(3)-
4(4) SFDR, should “the average number of 500 employees” be understood to include
workers who are assigned to the financial market participant even though they are
employed by a third party that invoices their services back to the financial market
participant, e.g. interim workers or workers that are employed by other organisations
within a group for instance as part of shared-service centres? Furthermore, can the
exemption in Article 23(5) of the Directive 2013/34/EU of the European Parliament and of
the Council (‘Accounting Directive’), which grants Member States the right to exempt
parent companies that are themselves the subsidiary of a larger group from drawing up
consolidated financial statements and a consolidated management report under that
Directive, apply to a “parent undertakings of a large group” as referred to in Article 4(4)
SFDR?

ESA Joint Committee (EBA, ESMA, EIOPA) · Accepted Answer

As a general rule, and unless specifically defined in an applicable Union legal act, the definition of
who constitutes an employee is governed by national law.
Since SFDR does not contain a definition of who constitutes an employee, it must therefore be
determined by reference to the definition of employee set-out in the applicable national law.
The exemption in Article 23 of the Accounting Directive has no bearing on the disclosure obligations
set out in Article 4(4) SFDR. These disclosures must be published and maintained on the website of
the financial market participant. They are not part of the latter’s management report even when the
financial market participant falls within the personal scope of the Accounting Directive.

500 employee principal adverse impact (PAI) threshold: For the purposes of Articles 4(3)- 4(4) SFDR, should “the average number of 500 employees” be understood to include workers who are assigned to t

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