From 24 May to 21 June 2018, the European Commission has sought feedback on amendments to delegated acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors offer to individual clients.
Flavia Micilotta, Eurosif Executive Director, says:
“Part of the focus of the legislative package the European Commission launched on the 24th of May, was on clarifying investors’ duties by incorporating the notion of ESG in specific directives.
Certainly, the most symbolic part of the sustainable finance change will be focused on the Commission’s commitment to amend regulation to oblige disclosure obligations on the way institutional investors integrate ESG criteria in their risk process. Much in line with Article 173 in France on a European scale, the Commission will look at specifically setting disclosure parameters for asset managers and investors to disclose how they are concretely applying the concept of fiduciary duty by sharing their work in relation to the impacts achieved. Affecting both asset managers and asset owners, the Commission proposal will look at the procedures for integration of ESG risks and the related impacts on the returns of the product or services, regardless of the pursuance of sustainable objectives as part of the investments.
In that respect, the Commission announced in parallel the launch of public consultations regarding integrating sustainability into suitability tests. This will entail amending the Delegated Acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors offer to individual clients. Demanding for informed consent, this is a formal way to determine that sustainability preferences are going to be taken into account when considering the suitability of the products for their clients.
Eurosif was pleased to give its feedback to both consultations and play its role in this very important step in sustainable finance.”
To read Eurosif’s feedback on MiFID II suitability requirements, please click here.
To read Eurosif’s feedback on Distribution of insurance-based investment products, please click here.