EC Welcomes Agreement on Sustainable Investment Disclosure Rules
EC welcomed the political agreement reached by the European Parliament and EU member states on new rules on disclosure requirements related to sustainable investments and sustainability risks. The new regulation sets out how financial market participants and financial advisers must integrate environmental, social, or governance (ESG) risks and opportunities in their processes, as part of their duty to act in the best interest of clients. The regulation requires the disclosure of adverse impact on ESG matters, such as in assets that pollute water or devastate bio-diversity, to ensure the sustainability of investments.
The regulation also sets uniform rules on how those financial market participants should inform investors about their compliance with the integration of ESG risks and opportunities. The availability of information is crucial to the integration of risks related to the impact of ESG events on the value of investments. The new regulation is built around three main pillars:
- Elimination of greenwashing (unsubstantiated or misleading claims about sustainability characteristics and benefits of an investment product) and an increase of market awareness on sustainability matters
- Regulatory neutrality—The rules introduce a disclosure toolbox to be applied in the same manner by different financial market operators. ESAs, and in particular the Joint Committee of the Authorities, will ensure further convergence and harmonization of disclosures in all the sectors concerned.
- Level playing field—The regulation covers investment funds; insurance-based investment products (life insurance products with investment components available as individual retail life policies as well as group life policies); private and occupational pensions and individual portfolio management; and both insurance and investment advice.
First proposed by EC in May 2018 as part of the Sustainable Finance Action Plan and the Capital Markets Union, these rules are an integral part of the EU efforts, under the sustainable development agenda and the carbon neutrality agenda of EU, to connect finance with needs of the real economy. They also support the 2012 United Nations' Sustainable Development Goals and the 2016 Paris Climate Agreement targets.EC is working with the co-legislators with the objective to reach an agreement on the remaining part of the package: EC proposal to establish a unified EU classification system (or taxonomy) of sustainable economic activities.
Related Links
Keywords: Europe, EU, Banking, Insurance, Securities, Sustainable Finance, ESG, Disclosures, ESAS, EC
Previous Article
FSB Publishes Responses to Consultation on CCP Resolution IssuesRelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
