Our interpretation is that, as is quite common in fixed income markets, the issuing entity of a bond should be connected with the core activities of the underlying/parent company. For example, the Luxembourgian SPV EIG Pearl which arguably holds a subsidiary relationship to Saudi Aramco (ARAMCO), should in our view be considered as ARAMCO in terms of looking at adverse impacts for purposes of SFDR alignment.
Our understanding is that an investor/investment manager is required to investigate the actual relationships if data is missing. For example, our interpretation of this is that if there is no ESG rating on the issuer SUEK Securities DAC2, the investor should make a best effort to understand if the issuer is related to Russia’s biggest thermal coal miner JSC SUEK. We believe these clarifications are useful to avoid circumvention, through use of complex financing structures, of certain end investors’ sustainability criteria.