The Joint ESAs report of October 2024 indicates that **95%** of funds classified as Article 8 and 9 now declare that they consider Principal Adverse Impacts (PAI). This improvement reflects better application of the SFDR's quantitative requirements and a progressive maturation of disclosure practices.

According to ESMA, a product classified as Article 9 must contain 100% sustainable investments, except for the liquid and hedging portion necessary for management. This requirement aims to ensure that Article 9 products are genuinely dedicated to sustainable investments, as clarified in the ESA Q&As.

Article 3 of the SFDR requires the publication on the website of policies for integrating sustainability risks into the investment decision-making process. This obligation goes beyond a generic statement of intent and requires a detailed description of the processes, methodologies, and resources deployed to manage these risks, as specified by the consolidated ESA Q&As.

Entity-level obligations are divided into two main components: (1) the publication of sustainability risk integration policies (Article 3) and (2) the Principal Adverse Impacts (PAI) statement for entities with more than 500 employees (Article 4). These obligations aim to strengthen transparency on ESG risk management within financial institutions.

The investigation reveals that the use of the Articles 8 and 9 classification as a 'quasi-labelling' system emerged spontaneously from the market. This was not the legislator's initial intention according to ESMA, which noted that this development created a shared reference framework for the industry, with approximately 51% of European fund assets classified as Article 8.

The SFDR 2.0 proposal indeed includes a 'Transition' category for strategies supporting the transition with a minimum of **70%** sustainable investments or credible transition plans. This evolution responds to market demands for increased and simplified transparency, with a more explicit categorisation than the current regime.

The Common Supervisory Action exercise revealed that **10 out of 28 national authorities** identified incorrect or misleading disclosures in more than 20% of sampled funds. This active oversight illustrates the enhanced enforcement mechanism by the ESAs to improve the quality of information published under the SFDR.

Financial products are classified under Articles 8 or 9, PAI indicators fall under quantitative obligations, and remuneration policies concern structural obligations. This categorisation reflects the three pillars of the SFDR framework: product classification, impact quantification, and internal governance.