Bundesverband Alternative Investments e.V. (BAI)

In 2018 the EU Commission published the “Action Plan on Sustainable Finance”. Since then, everyone has been talking about Sustainable Finance or ESG.

ESG is an English acronym, stands for "Environment, Social and Governance" and as an umbrella term means the consideration of sustainability goals in capital investments: in ecological terms, in social terms and with regard to (good) corporate governance. For example, "E" generally stands for the conservation of resources, environmentally friendly production, reduction of greenhouse gases, eco-efficiency with regard to energy, water, carbon dioxide and waste, energy management, investment in renewable energies etc., "S" for example for the observance of central labor rights, fair conditions at the workplace, occupational health and safety (also with suppliers), equal opportunities and diversity, prevention of exploitation and discrimination, freedom of assembly and trade unions etc., and "G" stands exemplarily for transparency in corporate governance and external communication, for the anchoring of sustainability management at the executive and supervisory board level and ESG risk management, the prevention of corruption, bribery and money laundering, for regulatory compliance and the avoidance of conflicts of interest.

With the "Action Plan on Sustainable Finance" the EU Commission has launched an extremely voluminous legislative initiative. The Action Plan comprises ten (legislative) measures which are intended to contribute to the achievement of three objectives, as visualized in the graph below:

  • The re-orientation of private capital flows towards sustainable investments (measures 1-5; dark blue)
  • The fostering of transparency and long-termism in markets (measures 6-8; dark grey)
  • The embedding of sustainability risk into risk management (measures 9-10, red).


With the "Action Plan on Sustainable Finance" the EU Commission has launched an extremely voluminous legislative initiative. The Action Plan comprises ten (legislative) measures which are intended to contribute to the achievement of three objectives, as visualized in the graphic below:

  • The re-orientation of private capital flows towards sustainable investments (measures 1-5; dark blue)
  • The fostering of transparency and long-termism in markets (measures 6-8; dark grey)
  • The embedding of sustainability risk into risk management (measures 9-10, red).

The Action Plan includes a wide range of initiatives such as

  • The taxonomy regulation to create a uniform classification system for sustainable activities
  • The Sustainable Finance Reporting Regulation (SFDR), the so-called Disclosure Regulation, to create consistent disclosure requirements with regard to sustainability
  • A CO2 benchmark regulation to provide standardized sustainability benchmarks
  • New secondary legislation or "delegated acts" to integrate sustainability risks and factors into the UCITS Directives and the AIFMD framework, i.e. for the entire fund industry
  • New delegated acts to integrate sustainability risks and factors into the MiFID II and IDD frameworks (including the integration of sustainability considerations into financial advice)
  • The development of a standard for Green Bonds
  • The development of an EU eco-label for financial products (EU Ecolabel)
  • Updating the non-financial reporting of companies as part of a review of the Non-Financial Reporting Directive (NFRD).

Of the entire legislative package of the Sustainable Finance Initiative, measures #1 (Taxonomy Regulation), #2 (standards and labels for environmentally friendly financial products/green financial products), #4 (incorporating sustainability as part of financial advice), #6 (developing sustainability benchmarks and better integrating sustainability into ratings), #7 strengthening the disclosure made by asset managers and financial advisors to their clients, including the Disclosure Regulation) and #9 (strengthening the rules on disclosure of sustainability information and accounting) are the most relevant and important legislative acts for funds and their management companies.

In our Investor Survey 2022, we dedicated a separate chapter to the topic of sustainable finance and ESG. We have compiled and analyzed the results in a short video.


Legal basis


The Taxonomy Regulation as a classification system helps to ensure that environmentally sustainable economic activities can be more easily identified as such in order to achieve the EU's climate and environmental goals in the long term. It includes specifications with which contents existing product-related transparency obligations are to be filled out according to the SFDR.



The Sustainable Finance Disclosure Regulation (SFDR) econtains numerous transparency provisions aimed at both financial market participants and financial advisors. The SFDR aims to reduce information asymmetries between investors and financial market participants with regard to the inclusion of sustainability risks and criteria. The main objective of the Disclosure Regulation is to create greater product transparency in order to make comparisons as easy as possible.



The Corporate Sustainablity Reporting Directive will replace the NFRD (Non-Financial Reporting Directive) and extend its scope to smaller companies in the future. The new directive will set detailed requirements for sustainability reporting (environmental, social, human rights and governance factors). This is intended to prevent a divergence of sustainability standards and thus ensure a smooth transition to a sustainable economy. The directive is scheduled to be implemented in 2024. The European Sustainability Reporting Standards (ESRS) are the mandatory format for CSRD reporting



On February 23, 2022, the European Commission presented a proposal for an EU-wide "supply chain directive", the Corporate Sustainability Due Diligence Directive CSDDD. This contains environmental and human rights-related due diligence requirements as well as an obligation for larger companies to draw up an action plan setting out measures to achieve climate targets.
The regulations, which apply to EU and in some cases non-EU companies, oblige companies to identify and prevent negative impacts of their activities throughout the value chain.



The Financial Markets Directive aims to improve the functioning and transparency of European financial markets and to enhance consumer protection. It concerns, for example, stricter requirements in the areas of portfolio management, independent investment advice, benefits, product governance, product intervention and record-keeping obligations. Sustainability is to become an increasing component of customer advisory processes in order to channel capital flows specifically into environmentally friendly investments.


Benchmark-Regulation, incl. delegated acts

The Benchmark Regulation provides a legal framework for the provision of benchmarks. Its main purpose is to protect consumers and investors. The aim is for benchmarks within the EU to be characterized by accuracy, integrity, robustness and reliability. In particular, it provides for minimum standards with regard to specific CO2 reference values and aims to achieve greater transparency in the inclusion of ESG factors in the reference values.


European Green Bonds (EuGB)

The draft regulation sets out specific requirements for green bonds that wish to carry the voluntary designation "European Green Bond". European green bonds or European Green Bonds are to be those bonds and financial products that pursue environmentally sustainable goals as defined by the EU taxonomy. The standard is intended to prevent greenwashing and promote the protection of trust. Transparency of the use of proceeds is to be ensured by means of factsheets and annual reports, with monitoring by external experts. The EUGB standard should also be open to non-European issuers.


European Single Access Point (ESAP)

The establishment of a single EU access point is intended to create a central access portal for public finance and sustainability-related information on companies and investment products in the EU. The platform is to bundle all information that companies are obliged to publish under Union law and provide free access to it for the general public.




BAI feedback statements

BAI Comments on draft ESRS Delegated Act
July 7, 2023

BAI Comments on the review of SFDR Delegated Regulation regarding PAI and financial product disclosures 
July 4, 2023

Reply form for the Consultation Paper on Guidelines for the use of ESG or sustainability-related terms in funds’ names
18. November 2022 


Comments on IOSCO’s Consultation Report 
Januar 2021 


BAI opinion on BaFin’s Consultation on the Guidance Notice on Dealing with Sustainability Risks
23. April 2020


BAI opinion on the Consultation Paper of the ESAs on the Level II measures for the Disclosure Regulation
3. November 2019



The BAI has been discussing implementation and practical issues relating to the numerous regulations of the Sustainable Finance Initiative for a long time in the BAI Sustainable Finance & ESG working group in order to develop positions and statements, always keeping the special needs of alternative and often illiquid asset classes in mind.

For example, numerous representatives in the BAI Roundtable on PAI coverage for real estate, infrastructure and private equity/private debt developed "best practices":

PAI Best Practices for Real Estate (Version 5) (Excel-Datei)
PAI Best Practices for Infrastructure (Version 7.2) (Excel-Datei)

At the end of August 2023, the working group on the European ESG Template EET proposed to FinDatEx, the body responsible for the EET, to include additional NFRD data points in the EET and also submitted a proposal for a template that can be used for NFRD insurance investors, as there is currently no market standard template for the exchange of NFRD data between asset managers and NFRD investors and the EET cannot be used for NFRD purposes.

Update to version 2.0: Version 2.0 specifies existing fields, introduces additional capex fields and divides the fields into mandatory and optional fields.

The Template (Version 2.0) can be downloaded here.

At the end of August, the BAI also sent FinDatEx various suggestions for improving EET 1.1.1. These can be found here.

Current information and the opportunity to exchange ideas can also always be found in the BAI member portal.


Click here to go to the main topic of the association's work: ESG

Click here to access the documents and recordings of the following webinars:

  • "European ESG Template (EET) - Lessons Learned from the First PAI Reporting for the Year 2022" on May 31, 2023.
  • "European ESG Template (EET) Reporting for Alternative Investments" on September 21, 2022
  • "BAI Practice Webinar on the Implementation of the SFDR RTS" on September 20, 2022.
  • "ESG-Management: Aktuelle Herausforderungen in der Praxis und Vorteile einer digitalen Umsetzung“ am 28. Mai 2020
  • "A practical guide to improving your ESG management" am 23. März 2020
  • "Impact Management und Messung im Bereich Real Assets" am 6. Februar 2020
  • "Responsible investments: how to select, implement and monitor Social and Governance aspects in the investment process" am 3. Februar 2020

Click here for more information on the next ESG workshop.

If you are interested in the workshop or insight documents, please contact Roland Brooks (brooks@bvai.de).


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