Page 17 - BIPAR Annual Report 2020_EN short

versions of this Regulation can be found here. The The Commission consultation on the Renewed Sustainable
Benchmarks Regulation will start to apply on the day Finance Strategy, which will run until 15 July 2020, includes
following its publication, i.e. on 10 December 2019. questions on these proposed amendments (see below).

The Benchmarks Regulation introduces a harmonised
regime creating a new category of financial benchmarks EIOPA and ESMA Technical Advice on integrating
aimed at giving greater information on an investment sustainability risks in the IDD and MiFID II
portfolio’s carbon footprint. This new category, which On 3 May 2019, EIOPA published its Technical Advice to
is a voluntary label, comprises two types of financial the European Commission on possible amendments
benchmarks: to the IDD and Solvency II Delegated Acts to integrate
- EU climate transition benchmarks, which aim sustainability risks and factors. The IDD section
to lower the carbon footprint of a standard investment covers conflict of interests (related to organisational
portfolio. More precisely, this type of benchmark should requirements) and product oversight and governance
be determined as taking into account companies that (related to the target market assessment). The Advice
follow a measurable, science-based “decarbonisation proposes that insurance intermediaries:
trajectory” by end 2022.
- EU Paris-aligned benchmarks, which have the - should include a clear reference in their conflict
more ambitious goal of selecting only components that of interests’ policy on how conflict of interests relating to
contribute to attaining the 20C reduction set out in the ESG considerations are identified and managed.
Products. This action is linked to two other actions included The main changes in this second version are fourfold: Paris climate agreement. - should consider ESG factors in the product
in the Action Plan: the EU Taxonomy and the EU Green approval process of any insurance product – not only IBIP-
Bond Standard. The objective sought by EU standards and - The thresholds regarding the exposure of the only if the insurance product is supposed to have an ESG
labels for sustainable financial products is to protect the constituents to green activities were significantly reduced; Amendments to the IDD and MiFID to integrate ESG profile.
integrity of and trust in the sustainable financial market, - Criteria on ‘Engagement’ were added; preferences in advice
as well as enable easier access for investors seeking those - The rule regarding the exposure of green bond ESMA also published its Technical Advice to the European
products. issuers to brown activities have been clarified: there is no Following a public consultation launched in May 2018, Commission on possible amendments to the MiFID II
limit; to which BIPAR contributed, the European Commission Delegated Act to integrate sustainability risks and factors.
The Joint Research Centre (JRC), the Commission’s - A discussion of the available scientific evidence published draft rules amending the Delegated The Advice proposes to introduce a clear reference
in-house science service, published in March 2019 a 1st has been introduced, in an attempt to comply with the Regulations under the IDD and MiFID II. The objective of to ESG considerations in the provisions on general
draft Technical Report proposing EU Ecolabel criteria obligations of the Ecolabel Regulation. these amendments is to ensure that investment firms and organisational requirements, risk management, conflicts
for retail financial products, mainly PRIIPs and IBIPs. insurance distributors who provide advice on IBIPs take of interest and product oversight and governance. ESMA
PRIIPs encompass investment funds (UCITS & RAIFs) and The 3rd draft Technical Repot is expected to be ESG considerations and their clients’ ESG preferences into also published its Technical Advice for the integration of
insurance products with an investment component (unit- presented by September/October 2020 and the European account in the suitability assessment they undertake to sustainability risks and factors in the UCITS Directive and
linked insurance). The EU Ecolabel criteria will determine Commission is expected to adopt its Decision in Q2 2021. see if proposed investments are appropriate for a client. AIFM (Alternative Investment Fund Managers) Directive.
which products are sufficiently “green” to be awarded Regulation on low carbon and positive carbon impact
with the EU Ecolabel by competent bodies following a benchmarks The Commission is expected to officially adopt these rules, The Commission will consider whether or not to amend
verification process. The Report proposed to start with a following the adoption of the new disclosure provisions the IDD and MiFID II Delegated Acts according to the
narrower product scope that could be extended in future The Regulation on “EU Climate Transition Benchmarks, for sustainable investments and sustainability risks and Technical Advice of EIOPA and ESMA.
revisions. In March 2020, the JRC presented to the ad hoc EU Paris-aligned Benchmarks and sustainability-related of the taxonomy. Once adopted by the Commission, the
working group its 2nd draft Technical Report. disclosures for benchmarks” was published in the Official amended delegated acts will enter into force after their Renewed Sustainable Finance Strategy 2020
Journal of the EU (Regulation 2019/2089). All language publication in the EU Official Journal, unless the European
Parliament and the Council object to them within a period On 8 April 2020, the European Commission has launched a
of three months (extendable to six months). consultation on its Renewed Sustainable Finance Strategy.

16 17