The level of compliance with the framework on integrating sustainability risks and disclosures is satisfactory overall, but improvements are needed, according to the European Securities and Markets Authority (ESMA) in its report published on Monday 30 June (see EUROPE 13650/4).
These improvements relate in particular to information at entity and product level, as required by the ‘SFDR’ regulation on disclosures in sustainable finance.
ESMA revealed that the joint supervisory action has helped national competent authorities (NCAs) identify shortcomings that could be corrected. In addition, supervised entities and NCAs are becoming increasingly familiar with the supervision of regulatory requirements. In the future, ESMA plans to strengthen coordination and cooperation with national competent authorities to ensure regulatory requirements are consistently and effectively applied.
Furthermore, it recognises the difficulty reported by national competent authorities with certain key concepts of the SFDR regulatory framework, such as the definition of sustainable investment under Article 2, which are left to the discretion of market players. It pointed out that a future revision of the SFDR which establishes product categories with clear criteria would remedy this shortcoming.
In addition, on Friday 27 June, the European supervisory authorities launched a consultation on how to integrate ESG risks into the financial stress tests for banks and insurers.
Read the report: https://aeur.eu/f/hnd
See the consultation: https://aeur.eu/f/hne (Original version in French by Anne Damiani)