ESA Joint Committee · sfdr-45 Final

If a financial product referred to in Article 8, paragraphs 1, 2 and 2a, or Article 9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088 does not invest in companies with good governance, is that produ

Regulation
SFDR
Answered
2022-05-17
Answer provided by
European Commission
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Question

If a financial product referred to in Article 8, paragraphs 1, 2 and 2a, or Article 9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088 does not invest in companies with good governance, is that product able to continue disclosing under Article 8, 9 and 11 of Regulation (EU) 2019/2088?

Answer

Where a financial product referred to in Article 8, paragraphs 1, 2 and 2a, of Regulation (EU) 2019/2088 pursues investment in companies, the companies must follow good governance practices. Failing that, the financial product is in breach of Article 8 of Regulation (EU) 2019/2088. Underlying assets of a financial product referred to in Article 9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088 must qualify as ‘sustainable investments’, as defined in Article 2, point (17), of that Regulation. Article 2, point (17), of Regulation (EU) 2019/2088 requires that the investee companies follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance. Failing that, the financial product is in breach of Article 9 of Regulation (EU) 2019/20888. 8 Please note additional clarifications on Articles 8 and 9 of Regulation (EU) 2019/2088 are provided in Q&As V.1 and V.2 above.
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This Q&A is published by ESA Joint Committee (EBA, ESMA, EIOPA) and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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