Page 12 - BIPAR Annual Report 2020_EN

Sustainable finance
BIPAR, together with its member associations, has been
Background actively following the Sustainable Finance Package
throughout the EU legislative procedure.
On 24 May 2018, the European Commission published Regulation on disclosures relating to sustainable
three proposals for EU Regulations aiming at connecting investments and sustainability risks
finance with the EU’s sustainable development agenda.
The Regulation on “sustainability-related disclosures in
The proposals include measures to: i) create an EU
the financial services sector” was published in the Official
classification system for sustainable investments – Journal of the EU in November 2019 (Regulation 2019/2088).
known as taxonomy; ii) introduce disclosures relating to All language versions of this Regulation can be found here.
The Disclosures Regulation will start to apply on 10 March
sustainable investments and sustainability risks; iii) and
2021 (15 months following the publication date). The
establish low-carbon benchmarks and positive carbon regulatory technical standards to be developed by the
impact benchmarks. Joint Committee of ESAs in order to specify the details of the
presentation and content of the information to be disclosed
will start to apply on 1 January 2022.
Valdis Dombrovskis, Vice-President responsible for
Financial Stability, Financial Services and Capital Markets The Disclosures Regulation introduces transparency
Union¬ said: “Only with the help of the financial sector can obligations on how insurance intermediaries, investment
firms and financial market participants integrate
we fill the annual €180 billion funding gap to reach our
environmental, social and governance (ESG) risks in their
2030 climate and energy targets. This will help to support a investment decisions and advice processes, as part of their
sustainable future for generations to come”. duty to act in accordance with the best interests of their
clients. Under this Regulation, insurance intermediaries
who provide advice with regard to IBIPs and investment
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firms which provide investment advice are required to:
On 8 April 2020, the European Commission launched a
consultation on its Renewed Sustainable Finance Strategy - include in their processes and assess on a
continuous basis, not only all relevant financial risks, but
which builds on the 2018 Action Plan.
also all relevant sustainability risks that may have a material
negative impact on the returns of financial products.
Valdis Dombrovskis, Executive Vice-President for an - have in place policies on how they integrate
sustainability risks in their investment advice and publish
Economy that Works for People said: “We are currently
them on their websites.
battling the coronavirus outbreak, but we must not lose
- include in their remuneration policies information
sight of our long-term sustainability objectives, including on how their remuneration policies are consistent with
making Europe climate-neutral by 2050. Creating a more the integration of sustainability risks, and publish that
information on their websites.
sustainable and resilient economy will be a key focus
of the recovery phase and the Renewed Sustainable
Finance Strategy will be essential to mobilising much-
needed capital. This consultation is an opportunity for all
Europeans, companies, civil society organisations and
public authorities to contribute to the EU’s sustainable
finance agenda, and how it can contribute to the economic
recovery”.
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The objective of these new rules is to eliminate contains details on the process to select the financial
greenwashing, i.e. the risk that products and services products they advise on. When financial advisers
which are marketed as sustainable or climate friendly in do not consider the adverse impacts of investment
reality do not meet the sustainability objectives claimed decisions on sustainability factors in their investment
to be pursued, and to increase market awareness on advice or insurance advice, they shall publish
sustainability matters. The three European Supervisory information with the reason for why they do not do
Authorities (ESAs), and in particular the Joint Committee so.
of the Authorities, will further develop technical standards 2. product level ESG disclosures. For financial
to ensure harmonisation of disclosures in all the sectors products with sustainability (environmental or
concerned. social) characteristics or for financial products that
have sustainability objectives, financial market
During the whole EU legislative process, BIPAR stressed participants, including intermediaries who act as
the importance of establishing a clear and consistent product providers, pension products manufacturers
legal framework and warned that if due attention is or portfolio management providers, should disclose
not paid there may be duplications of requirements in information in their: (a) pre-contractual disclosures,
the various sustainability-related legal texts that could (b) periodic documentation, and (c) on their website.
undermine legal certainty. Moreover, BIPAR expressed
the view that the scope of sustainability-related disclosure The consultation will be open until 1 September 2020.
requirements should be limited to products marketed as Following the close of the consultation, the draft RTS will
pursuing ESG objectives and that these requirements be finalised and submitted to the European Commission.
should start to apply only after a well-built taxonomy has
been established. Finally, remuneration policies should
not provide an incentive to recommend a particular (ESG)
product to customers.
Regulation on Taxonomy – Ecolabels – EU Green Bond
ESAs Joint Consultation on ESG Disclosures Standard
On 23 April 2020, the three European Supervisory Following negotiations, the European Commission,
Authorities (EIOPA, ESMA and EBA - ESAs) have issued a the European Parliament and the Council of the EU
Consultation Paper seeking input on their proposal for reached an agreement on the final text of the Taxonomy
environmental, social and governance (ESG) disclosure Regulation in December 2019. The taxonomy will be
standards – called Regulatory Technical Standards- for a EU-wide classification system which will provide a
financial market participants and financial advisers. The common language to identify what economic activities
consultation paper and the draft Regulatory Technical can be considered environmentally sustainable for the
Standards relate to several disclosure obligations purposes of determining the degree of sustainability of
laid down in the Regulation on sustainability-related an investment.
disclosures in the financial services sector (Disclosures
Regulation). This dossier is of particular importance for The Taxonomy will based on six EU environmental
insurance and financial intermediaries as they fall within objectives:
the scope of the Disclosures Regulation. 1. climate change mitigation;
2. climate change adaptation;
The draft Regulatory Technical Standards are proposed 3. sustainable use and protection of water and
with regards to the publication of: marine resources;
4. transition to a circular economy;
1. entity-level principal adverse impact disclosures. 5. pollution prevention and control; and
Financial advisers should publish on their website 6. protection and restauration of biodiversity and
an “adverse sustainability impacts statement” which ecosystems.
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