How can a financial product disclosing under Article 8 SFDR assess that good
governance is effectively considered? Is a reference to the UN Global compact sufficient
or should there be an alignment wi

Question

How can a financial product disclosing under Article 8 SFDR assess that good
governance is effectively considered? Is a reference to the UN Global compact sufficient
or should there be an alignment with OECD or ILO principles?

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

SFDR is a disclosure regulation. The Delegated Regulation provides details for how financial
market participants should disclose that a financial product falling under Article 8 SFDR invests in
companies respect the requirement to follow good governance practices. Articles 28(b) and 41(b)
of the Delegated Regulation requires the website disclosure of “the description of the policy to

assess good governance practices of the investee companies […], including with respect to sound
management structures, employee relations, remuneration of staff and tax compliance”. The use
of reference metrics, such as UN Global Compact, OECD or ILO principles is not prescribed, but
could form part of the “policy to assess” the management structures, employee relations,
remuneration of staff and tax compliance.

How can a financial product disclosing under Article 8 SFDR assess that good governance is effectively considered? Is a reference to the UN Global compact sufficient or should there be an alignment wi

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