The due-diligence statement must reflect the parent financial market participant’s impacts, not the entire group. The group headcount is used only to determine whether the obligation applies, not what must be reported.
As regards Article 4(4) of Regulation 2019/2088, must the calculation of the 500-employee threshold to the parent undertaking of a large group be applied to both EU and non-EU entities of the group without distinction as to the place of establishment of the group and/or subsidiary, and does the due diligence statement include impacts of the parent undertaking only or must it include the impacts of the group at a consolidated level?
The objective of Article 4 of Regulation 2019/2088 is to encourage financial market participants to pursue more sustainable investment strategies by reducing negative externalities caused by investments. The “comply or explain” mechanism distinguishes between principal adverse impacts and adverse impacts. The 500-employee criterion in Article 4(3) relates to a financial market participant, while the criterion in Article 4(4) relates to the large group, as referred to in Article 3(7) of Directive 2013/34/EU. The headcount includes all employees of the parent undertaking and all subsidiary undertakings, whether established inside or outside the EU. Financial market participants that are parent undertakings must publish due diligence statements that reflect the situation of the parent undertaking, not the consolidated group. The group-level 500-employee criterion is only relevant for triggering the reporting obligation. Subsidiary undertakings may still independently qualify as financial market participants under Article 4(3), or may consider principal adverse impacts under Article 4(1)(a). (Answer provided by the European Commission on the interpretation of the SFDR, published on 14 July 2021)
European Commission
