SFDR and biodiversity
articles 8, 9 and PAI indicators
The SFDR 2.0 reform strengthens biodiversity transparency requirements for real estate funds. Management companies must document their negative impact indicators (PIIs) with verifiable data, asset by asset.
SFDR: What biodiversity changes for real estate funds
The SFDR (Sustainable Finance Disclosure Regulation) requires asset management companies to classify their funds according to the degree to which they integrate ESG criteria. For real estate funds (OPCI, SCPI, real estate private equity funds), biodiversity has become a classification factor
Article 8 — ESG Promotion
The fund promotes environmental and social characteristics. It must demonstrate how it integrates biodiversity into its investment decisions and publish monitoring indicators.
Approximately 60% of European real estate funds are classified under Article 8
Article 9 — Sustainable Development Goal
The fund has a sustainable investment objective. It must prove that each asset contributes positively to an environmental objective (including biodiversity) and respects the DNSH principle.
Stronger evidence requirement — quantitative data per asset required
In both cases, biodiversity is no longer a "bonus" criterion—it's a component of the fund's regulatory documentation. Institutional investors (insurers, pension funds, sovereign wealth funds) are increasingly demanding granular biodiversity data before allocating funds.
SFDR 2.0: What changes in 2026-2027
The SFDR 2.0 reform proposal, published by the European Commission on 20 November 2025, replaces the Article 8 and 9 categories with a new three-tier system:
| Category SFDR 2.0 | Biodiversity requirement | Expected data |
|---|---|---|
| Transition | 70% of the portfolio aligned with a transition benchmark | ESG indicators by asset, measurable trajectory |
| Sustainable | Measurable contribution to an environmental objective + DNSH | Biodiversity score per asset, evidence of DNSH objective 6 Taxonomy |
| Impact | Measurable impact intent, demonstrated additionality | Baseline + post-intervention measure + causal attribution |
For all three categories, the trend is clear: qualitative data ("we integrate biodiversity") is no longer sufficient. We need quantifiable indicators per asset , with a traceable methodology and comparable results over time.
The BPS addresses this need by design: each asset receives an individual score, structured according to documented criteria, with a certificate signed by IRICE. The score can be consolidated at the portfolio level for the fund's product reporting.
PAI indicators and real estate biodiversity
Principal Adverse Impacts (PAIs) are the indicators of negative impacts that management companies must publish. For real estate, the PAI most directly linked to biodiversity is PAI 7 — “Activities having a negative impact on areas sensitive from a biodiversity perspective” .
Biodiversity PAI for real estate
- PAI 7 Share of assets located in or near biodiversity sensitive areas (Natura 2000, ZNIEFF, wetlands). Requires mapping for each asset.
- Actual PAI ( Proportion of assets exposed to a risk of deforestation or net artificialization). Requires monitoring of land use.
- Water PAI: Water consumption and impact on water bodies. Linked to ecosystem services for water regulation.
The BPS covers the PAI 7 by its Initial State phase (location of the site in relation to sensitive areas, ecological inventories) and provides the necessary data for related PAIs (land footprint, hydrological continuities, vegetation).
Article 29 LEC: the French supplementary obligation
In addition to SFDR (European regulation), French asset management companies with over €500 million in assets are subject to Article 29 of the Energy and Climate Law (LEC). This article mandates specific biodiversity reporting, with requirements that go beyond SFDR:
Biodiversity Strategy
Description of the strategy for aligning with the objectives of the Convention on Biological Diversity (CBD). How the portfolio contributes to reducing pressures on biodiversity.
Biodiversity footprint
Measuring the portfolio's biodiversity footprint. Macro-scale tools (GBS, ENCORE) cover the overall footprint; the BPS provides the granularity per real estate asset that is often lacking in these top-down approaches.
Risk analysis
Assessment of the risks of dependence and impact related to biodiversity. Convergence with the TNFD/LEAP approach and the E4-5 requirements of the CSRD.
Article 29 of the LEC and SFDR converge on the same need: biodiversity data for each asset . An asset management company using the BPS on its real estate portfolio simultaneously feeds its SFDR reporting, its Article 29 LEC reporting, and, if subject to the CSRD, its ESRS E4 reporting.
From SFDR to CSRD: a data continuum
Asset management companies subject to SFDR invest in companies (or hold assets) subject to CSRD. This creates a bidirectional data flow :
The BPS is designed to serve both links in this chain: the developer or property company that produces the data (CSRD reporting) and the management company that consolidates it (SFDR reporting). Individual scoring per asset is the basic building block that enables both levels of aggregation.
Frequently Asked Questions
Yes. SFDR applies to all financial market participants in the EU, including unlisted real estate fund management companies (SCPI, OPCI, institutional funds). The transparency obligations regarding biodiversity PAIs are the same.
An Article 8 fund promotes environmental characteristics (including biodiversity). An Article 9 fund has a sustainable investment objective and must demonstrate a measurable positive contribution. For Article 9 funds, biodiversity data per asset (such as BPS data) is essential.
The PAI 7 (activities negatively affecting areas sensitive to biodiversity) is a mandatory but incomplete indicator. It only covers proximity to protected areas. Comprehensive biodiversity reporting requires data on actual impacts (land development, fragmentation, species) which the BPS quantifies.
SFDR and carbon: climate PAIs too
SFDR also mandates climate-related PAIs: portfolio carbon footprint, GHG intensity of investments, and exposure to fossil fuels. For real estate funds, construction carbon (upstream scope 3) is the most significant item—and the most difficult to document without primary data.
Efficarbone measures actual construction site emissions, asset by asset, in a format that can be consolidated at the fund level — exactly as the BPS does for biodiversity. ESRS E1 and carbon →
Feed your SFDR reporting: biodiversity and carbon
BPS (biodiversity, PAI) and Efficarbone (construction site carbon, climate PAI): the two tools for a complete SFDR reporting, asset by asset, auditable.