PRODUCT DISCLOSURES
Product disclosures under SFDR can be divided into 3 groups:
- pre-contract information including a description of the following:
- how sustainability risks are introduced in the entity’s investment decisions / in the investment or insurance advisory services provided, as well as the results of the assessment of the impact of sustainability risks on the return on the products made available – in case the aforementioned risks are significant (when in the entity’s assessment the sustainability risks are insignificant – a clear explanation of the approach taken is sufficient) (Article 6 of the SFDR);
- An explanation of how it takes into account the adverse effects of investment decisions (“PAI“) on sustainability factors, a statement on the availability of information on PAI in periodic reports in accordance with SFDR Article 11(2) (when an entity does not take PAI into account – a statement on not taking PAI into account for each financial product and an explanation of the approach taken is sufficient ) (SFDR Article 7);
- with respect to a financial product that promotes an environmental or social aspect or both, with the companies in which investments are made following good governance practices – information on how the product ensures that these aspects are taken into account, and information on the index designated as a benchmark (if designated), whether and how it complies with the aforementioned aspects, and an indication of where the methods used to calculate the index can be consulted (Article 8 of the SFDR);
- with respect to a financial product that has a sustainable investment objective and an index has been designated as a benchmark, information on the alignment of the designated index with this objective, and an explanation of why and how the designated index aligned with this objective differs from the general market index (if an index has not been designated, an explanation of how the sustainable investment objective is to be achieved) (SFDR Article 9);
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2. information disclosed on the website, including:
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- Information on products that promote the environmental or social aspect or both, and products aimed at sustainable investment, a description of the environmental, social aspect or sustainable investment objective, information on the methods for assessing, measuring and monitoring the environmental or social aspect or impact of sustainable investment selected for the financial product, including, but not limited to, data sources, eligibility criteria for underlying assets and relevant sustainability indicators used for measurement or overall impact, information from SFDR Articles 8 and 9, and information from SFDR Article 11 (SFDR Article 10);
3. information disclosed in periodic reports, including:
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- for a financial product that promotes the environmental or social aspect or both, a description of the extent to which the environmental or social aspect is ensured;
- for a financial product that aims at sustainable investment – the overall impact on sustainability issues and a comparison of the overall impact with the impact of the designated index and the overall market index through sustainability indices (if the index is designated as a reference index).
SUBJECT DISCLOSURES
The transparency obligations of financial market participants and financial advisors under the SFDR include:
- publishing on the website information on the strategy for introducing risks to sustainability into the business, as appropriate, in the process of making investment decisions or in the provision of investment advisory services;
- publishing and maintaining on the website a statement on the due diligence strategy for PAI – in the case of an entity considering PAI and a non-PAI entity exceeding the 500-employee average criterion, or publishing and maintaining on the website a clear rationale for the approach taken – in the case of a non-PAI entity;
- include in its remuneration policy information on how to ensure their consistency with the introduction of sustainability risks into the business, and publish this information on its website.
