Following the answer to Q&A V.9, where financial products are passively tracking Paris
Aligned Benchmarks (PABs) and Climate Transition Benchmarks (CTBs), it can be
considered they do not fall under A

Question

Following the answer to Q&A V.9, where financial products are passively tracking Paris
Aligned Benchmarks (PABs) and Climate Transition Benchmarks (CTBs), it can be
considered they do not fall under Article 9(3) second subparagraph. Consequently,
financial market participants do not have to provide a detailed explanation of how the
continued effort of attaining the objective of reducing carbon emissions is ensured in
view of achieving the long‐term global warming objectives of the Paris Agreement, as
these products are deemed to have sustainable investments as defined in Article 2(17)
SFDR as their objective. If a financial product applies all the requirements applicable to
PABs or CTBs laid down Commission Delegated Regulation (EU) 2020/1818, can that
financial product disclose under Article 9(3) SFDR?

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

In line with the Q&A V.7, Article 9(3) SFDR is neutral in terms of product design. A financial
product that applies all the requirements applicable to PABs or CTBs as laid down in Commission
Delegated Regulation (EU) 2020/1818 can therefore fall within the scope of Article 9(3), even if it is
not passively tracking a PAB or a CTB or it has not designated a PAB or a CTB as a reference
benchmark.
The fact that this financial product applies the exact same requirements as those applicable to
PABs or CTBs can be used by the financial market participant to explain how the continued effort
of attaining the objective of reducing carbon emissions is ensured in view of achieving the
objectives of the Paris Agreement. In other words, a financial product applying the exact same
requirements would be considered equivalent to a financial product referred to in Q&A V.7 that has
an objective of carbon emission reduction that falls within the scope of Article 9(3) SFDR using an
active investment strategy.

Following the answer to Q&A V.9, where financial products are passively tracking Paris Aligned Benchmarks (PABs) and Climate Transition Benchmarks (CTBs), it can be considered they do not fall under A

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