ESAs to Publish Regulatory Standards Under SFDR at a Later Stage
In a recent announcement, EC highlighted that the Sustainable Finance Disclosure Regulation, or SFDR, comes into effect on March 10, 2021. EC also announced that SFDR will be accompanied by regulatory technical standards, which are being jointly developed by ESAs and will be applicable at a later stage. The SFDR will set common EU rules on how financial product manufacturers and financial advisers should inform end-investors about sustainability risks, how the impact of investments on the environment and society should be disclosed, and how financial products that are marketed as sustainability-related actually meet that ambition.
SFDR, which is claimed to be the cornerstone of the EC action plan on sustainable finance, aims to trigger changes in behavioral patterns in the financial sector, discourage greenwashing, and promote responsible and sustainable investments. First proposed by EC in May 2018, these new rules will strengthen and improve how sustainability-related information is disclosed in the financial sector. This enhanced transparency will increase awareness of financial products' sustainability credentials. While there is growing recognition of the importance of sustainability and awareness of climate-related risks and opportunities, the type of information provided to investors in the financial sector has been limited up until now and requirements have often differed across member states. These rules are part of the EU efforts under the Sustainable Development Agenda and Carbon Neutrality Agenda as well as its commitment to the Paris agreement, to ensure that the financial sector throws its full weight behind the fight against climate change.
Related Link: News Release
Keywords: Europe, EU, Banking, Securities, SFDR, ESG, Sustainable Finance, Climate Change Risk, Regulatory Technical Standards, Disclosures, EC
Featured Experts
Michael Denton, PhD, PE
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.
James Edwards
James leads the initiative to model the risk implications of climate change for corporates, SMEs, and sovereigns.
Previous Article
EC Approves Prolongation of Guarantee Scheme for Banks in GreeceRelated Articles
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
EC Mandates ESAs to Propose Amendments to SFDR Technical Standards
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
EBA Examines Supervisory Practices, Issues Deposits Reporting Template
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
US Agency Publications Address Basel, Reporting, and CECL Developments
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
SEC Extends Comment Period on Climate Risk Disclosures
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
APRA Reduces Committed Liquidity Facility, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
CMF Consults on Basel Rules, Presents Roadmap to Address Climate Risks
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
PRA Issues Statement on NPEs and Policy on Trading Activity Wind-Down
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
EBA Updates Standards for 2023 Benchmarking of Internal Approaches
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
EIOPA Responds to Stakeholder Views on Blockchain in Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.
