Principal Adverse Impact

Principal Adverse Impact (PAI) indicators refer to a set of metrics that measure the negative effects of investment decisions on sustainability factors such as the environment, social issues, and governance (ESG). These indicators are part of the Sustainable Finance Disclosure Regulation (SFDR) and are designed to help investors understand how their investment activities impact broader ESG concerns. The indicators include aspects like:

• Environmental impacts: Greenhouse gas emissions, biodiversity loss, water use, and waste management.
• Social impacts: Employee treatment, human rights, and labor practices.
• Governance: Business ethics, board diversity, and corruption prevention.

Financial entities must disclose how their investments cause significant negative effects in these areas, enhancing transparency and promoting responsible investment practices.