EC Publishes Rules on Integration of Sustainability Risks and Factors
The European Commission published two directives and five delegated regulations on integration of sustainability risks and sustainability factors into governance and activities of various entities. These regulations apply to insurance and reinsurance undertakings, investment firms, Undertakings for Collective Investment in Transferable Securities, and Alternative Investment Fund Managers. The published rules are context of directives such as the revised Markets in Financial Instruments Directive (MiFID II), the Alternative Investment Fund Managers Directive (AIFMD), the Solvency II Directive, and the Insurance Distribution Directive (IDD). The published directives and regulations shall enter into force on the twentieth day following that of their publication in the Official Journal of the European Union.
In this context, the following directives and regulations have been published:
- Commission Delegated Directive (EU) 2021/1270 amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities. Member states shall adopt and publish, by July 31, 2022 at the latest, the laws, regulations, and administrative provisions necessary to comply with this Directive. They shall apply those measures from August 01, 2022.
- Commission Delegated Directive (EU) 2021/1269 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations. Member states shall adopt and publish, by August 21, 2022 at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall apply those provisions from November 22, 2022.
- Commission Delegated Regulation (EU) 2021/1256 amending Delegated Regulation (EU) 2015/35 as regards the integration of sustainability risks in the governance of insurance and reinsurance undertakings. It shall apply from August 02, 2022.
- Commission Delegated Regulation (EU) 2021/1257 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products. It shall apply from August 02, 2022.
- Commission Delegated Regulation (EU) 2021/1254 correcting Delegated Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive. This Regulation shall be binding in its entirety and directly applicable in all Member States.
- Commission Delegated Regulation (EU) 2021/1253 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks, and preferences into certain organizational requirements and operating conditions for investment firms. It shall apply from August 02, 2022.
- Commission Delegated Regulation (EU) 2021/1255 amending Delegated Regulation (EU) No 231/2013 as regards the sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers. It shall apply from August 02, 2022.
Related Links
- Directive 2021/1270
- Directive 2021/1269
- Regulation 2021/1256
- Regulation 2021/1257
- Regulation 2021/1254
- Regulation 2021/1253
- Regulation 2021/1255
Effective Date: August 22, 2021
Keywords: Europe, EU, Insurance, Securities, Investment Firms, Solvency II, Insurance Distribution Directive, MiFID II, AIFMD, UCITS, ESG, Sustainable Finance, Governance, EC
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
EBA Proposes Guidelines on Role of AML/CFT Compliance OfficersRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
