Can a sustainable investment pursuant to Article 2(17) SFDR also be made by investing in another financial product, e.g. a UCITS fund?

As clarified in Q&A IV.29 above, for the calculation of principal adverse impacts, where investments are in other financial products, the financial market participant should look through to the underlying investments to consider the adverse impacts arising. Following the same logic, where a sustainable investment is an investment in another financial product, such as a UCITS fund, the financial market participant should look through the underlying investments of that financial product to ensure that the investment qualifies as a sustainable investment under Article 2(17) SFDR and to assess the proportion of sustainable investments accurately. If a financial product invests in other financial products that make sustainable investments with potentially differing applications of Article 2(17) SFDR, the financial market participant should ensure that the underlying investments of the other SFDR financial products comply with its own application of Article 2(17) SFDR. In order to understand how the underlying investments apply Article 2(17) SFDR (or Article 17(1)(g) of Commission Delegated Regulation (EU) 2022/1288), the financial market participant may refer to documentation of underlying financial products for their application (and proportion) of sustainable investments used by those financial products, however, financial market participants should carry out normal due diligence processes set out in the relevant sectoral legislation. The financial market participants are responsible for ensuring that the underlying investments comply with the requirements of Article 2(17) SFDR even where financial market participants rely on the underlying investments’ documentation.