Assessing SFDR PAI Reporting: Insights from Recent Reports on Developed and Emerging Markets

December 2023 witnessed the release of several reports examining the implications of reporting under the Sustainable Finance Disclosure Regulation (SFDR) and offering insights into future trends. In the study "Sustainable Finance in Luxembourg 2023: An Expanded Overview", conducted by the Luxembourg Sustainable Finance Initiative (LSFI) and PwC Luxembourg for example, it was revealed that over half of Luxembourg-based entities adhere to the "comply or explain" obligation regarding reporting on the Principal Adverse Impacts (PAIs) of their investment decisions. However, a closer examination of their disclosures reveals that not all entities fully meet the reporting requirements, leading to highly heterogeneous reports.