In case a financial product referred to in Article 8 of Regulation (EU) 2019/2088 which
promotes environmental characteristics does not commit in the pre-contractual
disclosures to invest in any econo

Question

In case a financial product referred to in Article 8 of Regulation (EU) 2019/2088 which
promotes environmental characteristics does not commit in the pre-contractual
disclosures to invest in any economic activities that contribute to an environmental
objective within the meaning of point (17) of Article 2 of Regulation (EU) 2019/2088, is the
financial market participant obliged to disclose the information required by Article 6 of
Regulation (EU) 2020/852? If it is determined later that the same financial product in fact
invested in such economic activities, is the financial market participant obliged to make
that disclosure?
Similarly, in case a financial product referred to in Article 9 of Regulation (EU) 2019/2088
only committed in the pre-contractual disclosures to invest in economic activities
contributing to social objectives and if it is determined later that the financial product in
fact invested in economic activities contributing to an environmental objective, would the
financial market participant be obliged to disclose the information required by Article 5
of Regulation (EU) 2020/852?
Application of Articles 5 and 6 of Regulation (EU) 2020/852
Articles 5 and 6 of Regulation (EU) 2020/852 of the European Parliament and of the Council16 apply
in respect of the environmental objectives referred to in Article 9, points (a) and (b), of that Regulation
from 1 January 2022 and in respect of the remaining environmental objectives referred to in Article
9, points (c) to (f), of that Regulation from 1 January 2023.
Neither Regulation (EU) 2019/2088 nor Regulation (EU) 2020/852 oblige financial market
participants that make available financial products referred to in Articles 5, first subparagraph, or
Article 6, first subparagraph, of Regulation (EU) 2020/852 as well as Article 8, paragraphs 1, 2 and
2a, or Article 9, paragraphs 1 to 4a, of Regulation (EU) 2019/2088, to invest in economic activities
that qualify as environmentally sustainable under Article 3 of Regulation (EU) 2020/852. In view of
recital 18 to Regulation (EU) 2020/852, disclosure rules enshrined in Articles 5 and 6 of that
Regulation aim to avoid harming end investor interest and the circumvention of the disclosure
obligation and to enable end investors to understand the degree of environmental sustainability of
the investment. The purpose of Articles 5 and 6 of Regulation (EU) 2020/852 is to incentivise a
behavioural change in the whole value chain, including delivery of sound information on sustainability
performance on underlying investments.
Data use
Financial market participants may only disclose such information for the purposes of disclosures
under Articles 5 and 6 of Regulation (EU) 2020/852 for which they have reliable data, otherwise they
would risk, where relevant, infringing Regulations (EU) 2019/2088 and (EU) 2020/852, sector
specific rules, incurring liability, or voidance of contracts under national law.
Financial products invest in a myriad of underlying financial instruments, including those issued by:
16 Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a
framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

- large non-financial and financial undertakings subject to an obligation to publish non-
financial information pursuant to Article 19a or 29a of Directive 2013/34/EU of the
European Parliament and of the Council17,
- SMEs;
- sovereigns;
- third country entities,
Information on the proportion of environmentally sustainable economic activities provided by certain
issuers in accordance with Commission Delegated Regulation (EU) 2021/217818 or in management
reports or the information in non‐financial statements in accordance with Directive 2013/34/EU19, is
therefore not a prerequisite information source for the application of Articles 5 and 6 of Regulation
(EU) 2020/852.
Therefore, where a financial market participant fails to collect data on the environmental objective or
objectives set out in Article 9 of Regulation (EU) 2020/852 and on how and to what extent the
investments underlying the financial product are in economic activities that qualify as environmentally
sustainable under Article 3 of that Regulation by a given financial product, the pre-contractual and
periodic product related disclosures must indicate zero. Should financial market participants decide
to use narrative explanations on lack of reliable data, such narratives risk contradicting the purpose
of Articles 5 and 6 of Regulation (EU) 2020/852. In addition, clarifications should neither leave room
for ambiguity about the alignment of the investments of the financial product with Regulation (EU)
2020/852, nor should they include negative justifications, such as explaining a lack of the alignment
by a lack of data.
However, recital 21 of Regulation (EU) 2020/852 refers to exceptional cases regarding economic
activities carried out by undertakings that are not required to disclose information under that
Regulation, where financial market participants cannot reasonably obtain the relevant information to
reliably determine the alignment with the technical screening criteria established pursuant to that
Regulation. That refers both to undertakings that do not fall under the scope of that Regulation, and
undertakings that are not yet required to disclose information under that Regulation at a given point
in time. In such exceptional cases and only for those economic activities for which complete, reliable
and timely information could not be obtained, financial market participants are allowed to make
complementary assessments and estimates on the basis of information from other sources. Such
assessments and estimates should only compensate for limited and specific parts of the desired
data elements and produce a prudent outcome. Financial market participants should clearly explain
the basis for their conclusions as well as the reasons for having to make such complementary
assessments and estimates for the purposes of disclosure to end investors20.
17 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements,
consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of
the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ L 182,
29.6.2013, p. 19).
18 Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the
European Parliament and of the Council by specifying the content and presentation of information to be disclosed by
undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic
activities, and specifying the methodology to comply with that disclosure obligation (OJ L 443, 10.12.2021, p. 9).
19 See in that respect Article 9(3) of Regulation (EU) 2019/2088.
20 Financial market participants making disclosures in accordance with Article 8 of Regulation (EU) 2020/852/Commission
Delegated Regulation of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the
Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a
or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the

Financial products referred to in Article 6, first subparagraph, of Regulation (EU) 2020/852
The scope of Article 6 of Regulation (EU) 2020/852 is restricted to financial products referred to in
Article 8(1) SFDR that promote environmental characteristics. It follows from Article 6 of Regulation
(EU) 2020/852 that such financial products must disclose the information in accordance with that
Article, including by way of the reference to mutatis mutandis the information in accordance with
Article 5 of Regulation (EU) 2020/852.
Therefore, to trigger the application of Article 6 of Regulation (EU) 2020/852, it is irrelevant if a
financial product commits to invest in economic activities that contribute to an environmental
objective within the meaning of Article 2, point (17) SFDR. A financial product as referred to in Article
8(1) SFDR that promotes environmental characteristics must include in the pre-contractual
disclosures, based on an assessment of reliable data with regard to whether investments will be in
economic activities that contribute to an environmental objective, information according to Article 6
of Regulation (EU) 2020/852 if that is the case.
Periodic disclosures as referred to in Article 11(2) SFDR must also include the information referred
to in Article 6 of Regulation (EU) 2020/852 if the investments made during the reference period,
based on an assessment of reliable data, were in economic activities contributing to an
environmental objective, irrespective of commitments made in the pre-contractual disclosure. Where
a financial product’s investments change over time during the financial product’s lifetime and also
include investments in economic activities that contribute to an environmental objective, that change
should be reflected in the pre-contractual documentation, subject to the sectoral rules applicable for
financial products referred to in Article 6(3) SFDR (see also Q&A no 6 of this Q&A batch).
Financial products referred to in Article 5, first subparagraph, of Regulation (EU) 2020/852
The scope of Article 5 of Regulation (EU) 2020/852 is restricted to financial products as referred to
in Article 9, paragraph 1, 2 or 3 SFDR that invest in an economic activity that contributes to an
environmental objective within the meaning of Article 2(17) of that Regulation.
Since Article 5 of Regulation (EU) 2020/852 provides for no further requirements for such investment,
its application is also triggered if the financial product with social objective referred to in the question
invests in economic activities contributing to an environmental objective.
(Answer provided by the European Commission on the interpretation of the SFDR, published
on 17 May 2022, amended on 6 April 202321)
2. For the purpose of the Taxonomy-alignment disclosures, which metric should be used for
financial undertakings, such as financial conglomerates, that have several activities
(asset management, insurance, and banking activities)?

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

For the purpose of the disclosure of investments in environmentally sustainable economic activities
under SFDR and the Delegated Regulation, where investee companies are financial conglomerates,
the requirements for such individual entities to present KPIs pursuant to Article 8 TR and Commission
methodology to comply with that disclosure obligation (OJ 443, 10.12.2021, p. 9) may under certain circumstances and for
voluntary purposes use estimates in 2022, see Q&A no 12 in the FAQs about the Article 8 Disclosures Delegated Act.
21 Original version published on 22 May 2022 can be found here:
https://www.esma.europa.eu/sites/default/files/library/c_2022_3051_f1_annex_en_v3_p1_1930070.pdf

Delegated Regulation (EU) 2021/2178 are linked to the requirements for these same entities to
prepare a non-financial statement in accordance with Article 19a and 29a of Directive 2013/34/EU.
For investments in financial conglomerates where a credit institution is the top parent, the scope should
therefore take into account the prudential scope of consolidation. For investments in any other financial
undertaking, the accounting scope of consolidation would normally apply.
Question 4 in the European Commission’s 21 December 2021 FAQs on Article 8 TR disclosures provide
some additional detail:
“In the case of credit institutions, the information should be disclosed in accordance with the requirements
relating to prudential consolidation […].
Consolidated non-financial statement disclosures should be based on the same consolidation principles
that apply to the group’s financial reporting under the applicable accounting principles […].”
Where the investment focuses on a subsidiary of a group disclosing under Article 8 TR, whether financial
or non-financial, financial market participants should ensure they use the KPIs providing the most relevant
and representative view of their investee companies' activities. This may lead them to use KPIs specific
to subsidiaries.
For investments in non-conglomerate financial undertakings, the allocation of those financial
undertakings’ contribution to taxonomy-aligned investments is set out in Article 17(4) of the Delegated
Regulation, i.e. KPIs from Section 1.1 points (b) to (e) of Annex III to Delegated Regulation (EU)
2021/2178 should be used.

In case a financial product referred to in Article 8 of Regulation (EU) 2019/2088 which promotes environmental characteristics does not commit in the pre-contractual disclosures to invest in any econo

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