As part of its package of measures on sustainable finance (see other news), the European Commission presented on Wednesday 21 April amendments to six delegated acts to ensure that financial firms take sustainability into account in their procedures and in the investment advice they give to their clients.
“All of these will increase the demand for financial products with sustainability at their core and reduce greenwashing”, said European Commissioner for Financial Services, Mairead McGuinness, at a press conference.
In concrete terms, the Commission is introducing the assessment of client sustainability preferences into the existing delegated acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive (IDD).
Insurance and investment advisers will now be required to obtain information not only on the client’s investment knowledge and experience, capacity to bear loss and risk tolerance, but also on their sustainability preferences.
The amendments also clarify the obligations of a financial firm when assessing its sustainability risks.
With regard to the supervision and governance of investment and insurance products, financial product originators and financial advisers will have to take sustainability factors into account from the conception phase of financial products.
Note that the amendments do not specify the proportion of a financial product that must be invested in activities that comply with the EU taxonomy. This should be the result of a dialogue between the adviser and the client, the Commission says.
The delegated acts provide for a period of 12 months to allow market players to prepare for these changes. The Commission estimates that the new rules should start to apply around October 2022.
The six texts can be viewed at the following address: https://bit.ly/3sC3Hxf (Original version in French by Marion Fontana)