Is the European regulatory framework fit to reveal investments in activities harming biodiversity and support their reduction? Considering the Commission’s plans to reduce burdens associated with disclosure requirements, how could the regulatory framework be improved to solve the information gap related to nature-negative investments and improve the utility of this information? A clue to the answer may be found in the Principle Adverse Impacts (PAIs) of SFDR.
In this paper, we explore the hidden potential of PAIs for biodiversity. We investigate current gaps and inconsistencies in the PAI framework, and we shed light on the improvements that could turn PAIs into a strong regulatory tool to reveal and incentivize the reduction of nature-negative investments (notably through follow-up of transition strategies).
