Finance Glossary
PAI (Principal Adverse Impacts)
What does PAI mean?
The SFDR regulation requires financial market participants to publish on their website information regarding the consideration or not of PAI (Principal Adverse Impact), or main negative sustainability impacts arising from investment decisions.
The European Union has identified 64 negative impact indicators that must be calculated, of which 18 will be mandatory to report and 46 will be voluntary. They will focus on standard environmental, social, and governance (ESG) factors that investors are accustomed to monitoring.
The mandatory indicators range from carbon emissions, exposure to fossil fuels, and waste levels (E) to gender diversity and human rights due diligence (S), as well as a company's history regarding corruption, bribery, or other scandals (G).