Yes. For Indicator 7.2, financial sanctions explicitly count as “incidents leading to sanctions”. That includes administrative monetary penalties and fines.
In Table 3, indicator 7.2 (Number of incidents of discrimination leading to sanctions), how should incidents that lead to sanctions be measured? Industry would welcome guidelines on this, such as whether fines or penalties are included in the definition of sanctions.
Until the application of the CSRD and the adoption of the ESRS by the European Commission, financial market participants may consider the definitions set out in the draft prototypes issued by EFRAG and especially the definition of a discrimination incident in Appendix A and DR S1-18 of ESRS S1 ‘Own workforce – Equal opportunities”. Disclosure requirement S1-18 of the Exposure Draft ESRS S1 “Own workforce – Equal Opportunities” requires the undertaking to disclose the total number of incidents of discrimination, including harassment, reported in the reporting period; and the number of incidents of discrimination leading to financial sanctions. About incidents, Appendix A notes that: “an ‘incident’ refers to a legal action or complaint registered with the undertaking or competent authorities through a formal process, or an instance of non-compliance identified by the undertaking through established procedures. Established procedures to identify instances of non-compliance can include management system audits, formal monitoring programs, or grievance mechanisms.” As a consequence, when disclosing indicator 7.2 of Table 3 about the number of incidents of discrimination leading to sanctions, financial market participants should consider financial sanctions such as administrative monetary penalties (or fines) as “incidents leading to sanctions". For sake of clarity, like all other PAI indicators of Annex I, indicator 7 of Table 3 of Annex I includes only the sanctions applied against entities causing the impacts, not the potential sanctions applied against the financial market participant itself, since the PAI disclosures focus exclusively on the adverse impacts of the financial market participant’s investment decisions.
European Supervisory Authorities (ESAs)
