Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 supplementing Regulation (EU) 2019/2088 of the European Parliament and of the Council with regard to regulatory technical standards specifying the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts, and the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in pre-contractual documents, on websites and in periodic reports (Text with EEA relevance)

CHAPTER I

DEFINITIONS AND GENERAL PROVISIONS

Article 1

Definitions

For the purposes of this Regulation, the following definitions apply:

(1) ‘financial undertaking’ means an AIFM as defined in Article 4(1), point (b), of Directive 2011/61/EU of the European Parliament and of the Council (¹), a management company as defined in Article 2(1), point (b), of Directive 2009/65/EC of the European Parliament and of the Council (²), an investment company authorised in accordance with Articles 27, 28 and 29 of Directive 2009/65/EC that has not designated for its management a management company authorised in accordance with Articles 6, 7 and 8 of that Directive, a credit institution as defined in Article 4(1), point (1), of Regulation (EU) No 575/2013 of the European Parliament and of the Council (³), an investment firm as defined in Article 4(1), point (2), of Regulation (EU) No 575/2013, an insurance undertaking as defined in Article 13, point (1), of Directive 2009/138/EC of the European Parliament and of the Council (⁴), a reinsurance undertaking as defined in Article 13, point (4), of Directive 2009/138/EC, or any third country entity that carries out similar activities, is subject to the laws of a third country and is supervised by a third-country supervisory authority;

(2) ‘non-financial undertaking’ means an undertaking that is not a financial undertaking as defined in point (1);

(3) ‘sovereign exposure’ means an exposure to central governments, central banks and supranational issuers;

(4) ‘environmentally sustainable economic activity’ means an economic activity that complies with the requirements laid down in Article 3 of Regulation (EU) 2020/852;

(5) ‘transitional economic activity’ means an economic activity that complies with the requirements laid down in Article 10(2) of Regulation (EU) 2020/852;

(6) ‘enabling economic activity’ means an economic activity that complies with the requirements laid down in Article 16 of Regulation (EU) 2020/852.

Article 2

General principles for the presentation of information

Article 3

Reference benchmarks with basket indexes

Where an index designated as a reference benchmark is made up of a basket of indexes, financial market participants and financial advisers shall provide the information relating to that index in respect of that basket and of each index in that basket.

CHAPTER II

TRANSPARENCY ABOUT ADVERSE IMPACTS ON SUSTAINABILITY FACTORS

SECTION 1

Financial market participants

Article 4

Statement by financial market participants that they do consider principal adverse impacts of their investment decisions on sustainability factors

Article 5

Summary section

In the summary section in Table 1 of Annex I, financial market participants shall include all of the following:

(a) the name of the financial market participant to which the adverse sustainability impacts statement relates;

(b) the fact that principal adverse impacts on sustainability factors are considered;

(c) the reference period of the statement;

(d) a summary of the principal adverse impacts.

The summary section in Table 1 of Annex I shall be drafted in all of the following languages:

(a) one of the official languages of the home Member State of the financial market participant and, where different, in an additional language customary in the sphere of international finance;

(b) where a financial product of the financial market participant is made available in a host Member State, one of the official languages of that host Member State.

The summary section shall be of a maximum length of two sides of A4-sized paper when printed.

Article 6

Description of the principal adverse impacts of investment decisions on sustainability factors

In the section ‘Description of the principal adverse impacts on sustainability factors’ in Table 1 of Annex I, financial market participants shall complete all the fields that relate to the indicators related to principal adverse impacts of their investment decisions on sustainability factors, and they shall add all of the following:

(a) information on one or more additional climate and other environment-related indicators, as set out in Table 2 of Annex I;

(b) information on one or more additional indicators for social and employee matters, respect for human rights, anti-corruption and anti-bribery matters, as set out in Table 3 of Annex I;

(c) information on any other indicators used to identify and assess additional principal adverse impacts on a sustainability factor.

Article 7

Description of policies to identify and prioritise principal adverse impacts of investment decisions on sustainability factors

In the section ‘Description of policies to identify and prioritise principal adverse impacts on sustainability factors’ in Table 1 of Annex I, financial market participants shall describe their policies to identify and prioritise principal adverse impacts on sustainability factors and how those policies are kept up to date and applied, including all of the following:

(a) the date on which the governing body of the financial market participant approved those policies;

(b) how the responsibility for the implementation of those policies within organisational strategies and procedures is allocated;

(c) the methodologies to select the indicators referred to in Article 6(1), points (a), (b) and (c), and to identify and assess the principal adverse impacts referred to in Article 6(1), and in particular an explanation of how those methodologies take into account the probability of occurrence and the severity of those principal adverse impacts, including their potentially irremediable character;

(d) any associated margin of error within the methodologies referred to in point (c) of this paragraph, with an explanation of that margin;

(e) the data sources used.

Article 8

Engagement policies section

In the section ‘Engagement policies’ in Table 1 of Annex I, financial market participants shall provide all of the following information:

(a) where applicable, brief summaries of the engagement policies referred to in Article 3g of Directive 2007/36/EC of the European Parliament and of the Council (⁵);

(b) brief summaries of any other engagement policies to reduce principal adverse impacts.

(a) the indicators for adverse impacts considered in the engagement policies referred to in paragraph 1;

(b) how those engagement policies will be adapted where there is no reduction of the principal adverse impacts over more than one period reported on.

Article 9

References to international standards section

The description referred to in paragraph 1 shall contain information about all of the following:

(a) the indicators used to consider the principal adverse impacts on sustainability factors referred to in Article 6(1) that measure the adherence or alignment referred to in paragraph 1;

(b) the methodology and data used to measure the adherence or alignment referred to in paragraph 1, including a description of the scope of coverage, data sources, and how the methodology used forecasts the principal adverse impacts of investee companies;

(c) whether a forward-looking climate scenario is used, and, if so, the name and provider of that scenario and when it was designed;

(d) where no forward-looking climate scenario is used, an explanation of why the financial market participant does consider forward-looking climate scenarios to be irrelevant.

Article 10

Historical comparison

Financial market participants that have described the adverse impacts on sustainability factors for a period preceding the period for which information is to be disclosed in accordance with Article 6 shall provide in the section ‘Description of principal adverse impacts on sustainability factors’ in Table 1 of Annex I a historical comparison of the period reported on with the previous period reported on and, subsequently, with every previous period reported on up to the last five previous periods.

SECTION 2

Financial advisers

Article 11

Statement by financial advisers that they do consider in their insurance or investment advice principal adverse impacts on sustainability factors

The statement and information referred to in paragraphs 1 and 2 shall contain details on the process used by financial advisers to select the financial products they advise on, including all of the following:

(a) how the financial advisers use the information published by financial market participants pursuant to this Regulation;

(b) whether the financial advisers rank and select financial products based on the indicators listed in Table 1 of Annex I and any additional indicators and, where applicable, a description of the ranking and selection methodology used;

(c) any criteria or thresholds based on the principal adverse impacts listed in Table 1 of Annex I that are used to select, or advise on, financial products.

SECTION 3

Statement by financial market participants that they do not consider adverse impacts of investment decisions on sustainability factors, and statement by financial advisers that they do not consider adverse impacts of investment decisions on sustainability factors in their investment or insurance advice

Article 12

Statement by financial market participants that they do not consider adverse impacts of their investments decisions on sustainability factors

The statement referred to in paragraph 1 shall contain all of the following:

(a) a prominent statement that the financial market participant does not consider any adverse impacts of its investment decisions on sustainability factors;

(b) the reasons why the financial market participant does not consider any adverse impacts of its investment decisions on sustainability factors and, where relevant, information on whether the financial market participant intends to consider such adverse impacts by reference to the indicators listed in Table 1 of Annex I, and if so, when.

Article 13

Statement by financial advisers that they do not consider adverse impacts of investment decisions on sustainability factors in their investment or insurance advice

The statement and information referred to in paragraphs 1 and 2 shall contain all of the following:

(a) a prominent statement that the financial adviser does not consider any adverse impacts of investment decisions on sustainability factors in its investment or insurance advice;

(b) the reasons why the financial adviser does not consider any adverse impacts of investment decisions on sustainability factors in its investment or insurance advice and, where relevant, information on whether the financial adviser intends to consider such adverse impacts by reference to the indicators listed in Table 1 of Annex I, and if so, when.

CHAPTER III

PRE-CONTRACTUAL PRODUCT DISCLOSURE

SECTION 1

Promotion of environmental or social characteristics

Article 14

Presentation by financial market participants of the pre-contractual information to be disclosed pursuant to Article 8(1), (2) and (2a) of Regulation (EU) 2019/2088

Financial market participants shall provide at the beginning of the annex to the documents or the information referred to in Article 6(3) of Regulation (EU) 2019/2088 all of the following information:

(a) whether the financial product intends to make any sustainable investments;

(b) whether the financial product promotes environmental or social characteristics, without having as its objective a sustainable investment.

Article 15

Sustainable investment information in the asset allocation section for financial products that promote environmental characteristics

For the financial products referred to in Article 6, first subparagraph, of Regulation (EU) 2020/852, financial market participants shall provide, in the section ‘To what minimum extent are sustainable investments with an environmental objective aligned with the EU Taxonomy?’ in the template set out in Annex II, all of the following:

(a) a graphical representation in the form of a pie chart of: (i) the degree to which the aggregated investments are investments in environmentally sustainable economic activities, as calculated in accordance with Article 17(1) to (4) of this Regulation; (ii) the degree to which the aggregated investments, excluding sovereign exposures, are investments in environmentally sustainable economic activities, as calculated in accordance with Article 17(5) of this Regulation;

(b) a description of the investments underlying the financial products that are in environmentally sustainable economic activities, including whether the compliance of those investments with the requirements laid down in Article 3 of Regulation (EU) 2020/852 will be subject to an assurance provided by one or more auditors or a review by one or more third parties and, if so, the name or the names of the auditor or third party;

(c) where the financial products invest in economic activities other than environmentally sustainable economic activities, a clear explanation of the reasons for doing so;

(d) where the financial products have sovereign exposures and the financial market participant cannot assess the extent to which those exposures contribute to environmentally sustainable economic activities, a narrative explanation of the proportion in total investments of investments that consist of those exposures.

For the purposes of paragraph 1, point (a), all of the following shall apply:

(a) financial market participants shall use: (i) the same key performance indicator for the aggregated investments in non-financial undertakings; (ii) the same key performance indicator for the aggregated investments in the same type of financial undertakings;

(b) for insurance and reinsurance undertakings that carry out non-life underwriting activities, the key performance indicator may combine the investment and the underwriting key performance indicators in accordance with Article 6 of Delegated Regulation (EU) 2021/2178;

(c) where the financial products invest in environmentally sustainable economic activities referred to in Sections 4.26, 4.27 and 4.28 of Annexes I and II to Delegated Regulation (EU) 2021/2139, or in environmentally sustainable economic activities referred to in Sections 4.29, 4.30 and 4.31 of those Annexes, the graphical representations shall illustrate separately the proportion of the aggregated investments in: (i) environmentally sustainable economic activities referred to in Sections 4.26, 4.27 and 4.28 of those Annexes; (ii) environmentally sustainable economic activities referred to in Sections 4.29, 4.30 and 4.31 of those Annexes.

For the purposes paragraph 1, point (b), the description shall include all of the following:

(a) in respect of investee companies that are non-financial undertakings, whether the degree to which the investments are in environmentally sustainable economic activities is measured by turnover, or whether, due to the features of the financial product, the financial market participant has decided that a more representative calculation is given when that degree is measured by capital expenditure or operating expenditure and the reason for that decision, including an explanation of why that decision is appropriate for investors in the financial product;

(b) where information about the degree to which the investments are in environmentally sustainable economic activities is not readily available from public disclosures by investee companies, details of whether the financial market participant obtained equivalent information directly from investee companies or from third party providers;

(c) a breakdown of the minimum proportions of investments in the transitional economic activities and in the enabling economic activities, in each case expressed as a percentage of all investments of the financial product.

Article 16

Sustainable investment information in the asset allocation section for financial products that promote social characteristics

For financial products that promote environmental or social characteristics and that include a commitment in sustainable investments with a social objective, financial market participants shall include in the section ‘What is the asset allocation planned for this financial product?’ in the template set out in Annex II the minimum share of those sustainable investments.

Article 17

Calculation of the degree to which investments are in environmentally sustainable economic activities

The degree to which investments are in environmentally sustainable economic activities shall be calculated in accordance with the following formula:

where ‘investments of the financial product in environmentally sustainable economic activities’ shall be the sum of the market values of the following investments of the financial product:

(a) for debt securities and equities of investee companies, where a proportion of activities of those investee companies is associated with environmentally sustainable economic activities, the market value of that proportion of those debt securities or equities;

(b) for debt securities other than those referred to in point (a), where a proportion of the proceeds is required by the terms of those debt securities to be used exclusively on environmentally sustainable economic activities, the market value of that proportion;

(c) for bonds issued under Union legislation on environmentally sustainable bonds, the market value of those bonds;

(d) for investments in real estate assets which qualify as environmentally sustainable economic activities, the market value of those investments;

(e) for investments in infrastructure assets which qualify as environmentally sustainable economic activities, the market value of those investments;

(f) for investments in securitisation positions as defined in Article 2, point (19), of Regulation (EU) 2017/2402 of the European Parliament and of the Council (⁶) with underlying exposures in environmentally sustainable economic activities, the market value of the proportion of those exposures;