Featured Product

    IOSCO Proposes Recommendations on Sustainability-Related Expectations

    June 30, 2021

    IOSCO is requesting feedback, until August 15, 2021, on the proposed recommendations on sustainability-related regulatory and supervisory expectations in asset management. The recommendations cover five areas: asset manager practices, policies, procedures and disclosures; product disclosures; supervision and enforcement; terminology; and financial and investor education. The recommendations aim to address various challenges, such as existing gaps in skills and expertise and the risk of fragmentation caused by divergent regulatory approaches. These challenges may further contribute to a lack of comparability for sustainability-related products, creating difficulties for investors’ monitoring and decision-making and, therefore, facilitating greenwashing.

    The consultation report on proposed recommendations outlines the types of greenwashing at the asset manager and product levels, describes the different regulatory approaches taken by securities regulators to address sustainability-related risks and opportunities, and provides an overview of the financial and investor education initiatives conducted by regulators. The consultation report further discusses asset managers’ sustainability-related practices and firm-level disclosures, which are broadly categorized into governance, strategy, risk management, and metrics and targets. This categorization is consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The consultation report proposes the following recommendations designed to provide a list of potential areas for regulatory consideration, in line with the domestic regulatory frameworks:

    • Asset Manager Practices, Policies, Procedures, and Disclosures. Securities regulators and/or policymakers, as applicable, should consider setting regulatory and supervisory expectations for asset managers in respect of the development and implementation of practices, policies, and procedures related to sustainability-related risks and opportunities, along with the related disclosures.
    • Product Disclosures. Securities regulators and/or policymakers, as applicable, should consider clarifying and/or expanding on the existing regulatory requirements or guidance or, if necessary, creating new regulatory requirements or guidance, to improve product-level disclosures to help investors better understand sustainability-related products and material sustainability-related risks for all products.
    • Supervision and Enforcement. Securities regulators and/or policymakers, as applicable, should have supervisory tools to ensure that asset managers and sustainability-related products are in compliance with regulatory requirements and enforcement tools to address any breaches of such requirements.
    • Terminology. Securities regulators and/or policymakers, as applicable, should consider encouraging industry participants to develop common sustainable finance-related terms and definitions to ensure consistency throughout the global asset management industry.
    • Financial and Investor Education. Securities regulators and/or policymakers, as applicable, should consider promoting financial and investor education initiatives relating to sustainability, or, where applicable, enhance existing sustainability-related financial and investor education initiatives.

    The consultation report also highlights a clear need to address challenges associated with the lack of reliability and comparability of data at the corporate level as well as the environmental, social, and governance (ESG) data and ratings provided by third-party providers. The recently published report on sustainability-related issuer disclosures addresses data gaps at the corporate level, while a separate IOSCO report, to be published in July, will cover the proliferation of data and ESG ratings providers.

     

    Related Links

    Comment Due Date: August 15, 2021

    Keywords: International, Banking, Securities, Disclosures, Sustainable Finance, ESG, Climate Change Risk, TCFD, IOSCO

    Related Articles
    News

    EBA Proposes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.

    July 26, 2021 WebPage Regulatory News
    News

    IOSCO Proposes Recommendations on ESG Ratings and Data Providers

    The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.

    July 26, 2021 WebPage Regulatory News
    News

    EC to Defer Application of SFDR Standards Till July 2022

    The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.

    July 23, 2021 WebPage Regulatory News
    News

    BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance

    The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.

    July 22, 2021 WebPage Regulatory News
    News

    EBA Seeks Views on Proportionality Assessment Methodology

    The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.

    July 22, 2021 WebPage Regulatory News
    News

    US Agencies Propose Changes to Call Reports and Instructions

    Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.

    July 22, 2021 WebPage Regulatory News
    News

    PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker

    The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Examines Asset Encumbrance in Banking Sector

    The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.

    July 21, 2021 WebPage Regulatory News
    News

    EBA Publishes Methodological Guide to Mystery Shopping

    The European Banking Authority (EBA) published a methodological guide to mystery shopping.

    July 21, 2021 WebPage Regulatory News
    News

    APRA Issues Update on Capital Reform Policy Settings for Banks

    The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.

    July 21, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7287