EC is consulting on six legislative initiatives related to sustainable finance. The legislative initiatives aim to shift capital flows away from activities that have negative social and environmental consequences and direct finance toward economic activities that have genuine long-term benefits for society. The legislative initiatives comprise amendments to four regulations—namely amendments to the Solvency II (Regulation 2015/35), Regulations 2017/2358 and 2017/2359, Regulation 2017/565, and Regulation 231/2013. The legislative initiatives also involve amendments to two directives—the revised Markets in Financial Instruments Directive (MiFID II or 2017/593) and Undertakings for Collective Investment in Transferable Securities (UCITS or Directive 2010/43/EU). Feedback is requested by July 06, 2020.
The EU action plan on sustainable finance seeks to clarify the duties of financial institutions to provide their clients with clear advice on the social and environmental risks and opportunities attached to their investments. The draft Regulations and Directives are part of a broader EC initiative on sustainable development. It lays the foundation for an EU framework that puts sustainability considerations at the center of the financial system to support transforming the economy into a greener, more resilient, and circular system in line with the European Green Deal objectives. The legislative initiatives comprise the following draft delegated regulations and directives:
- Draft Regulation that amends Solvency II Regulation regarding the integration of sustainability risks in the governance of insurance and reinsurance undertakings
- Draft Regulation that amends Delegated Regulations 2017/2358 and 2017/2359 regarding the integration of sustainability factors 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
- Draft Regulation that amends Regulation 2017/565 regarding the integration of sustainability factors, risks, and preferences into certain organizational requirements and operating conditions for investment firms
- Draft Regulation that amends Regulation 231/2013 regarding sustainability risks and sustainability factors to be taken into account by Alternative Investment Fund Managers
- Draft Directive that amends MiFID II regarding the integration of sustainability factors and preferences into the product governance obligations
- Draft Directive that amends UCITS Directive regarding the sustainability risks and sustainability factors to be taken into account for UCITS
- Draft Regulation Amending Solvency II
- Draft Regulation Amending Regulations 2017/2358 and 2017/2359
- Draft Regulation Amending Regulation 2017/565
- Draft Regulation Amending Regulation 231/2013
- Draft Directive Amending MiFID II
- Draft Directive Amending UCITS Directive
Comment Due Date: July 06, 2020
Keywords: Europe, EU, Banking, Insurance, Securities, Sustainable Finance, Solvency II, Governance, Reinsurance, MIFID II, ESG, Climate Change Risk, UCITS Directive, EC
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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