Page 13 - BIPAR Annual Report 2020_EN

Sustainable finance

BIPAR, together with its member associations, has been The objective of these new rules is to eliminate contains details on the process to select the financial
Background actively following the Sustainable Finance Package greenwashing, i.e. the risk that products and services products they advise on. When financial advisers
throughout the EU legislative procedure. 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
On 24 May 2018, the European Commission published Regulation on disclosures relating to sustainable to be pursued, and to increase market awareness on advice or insurance advice, they shall publish

three proposals for EU Regulations aiming at connecting investments and sustainability risks 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.
finance with the EU’s sustainable development agenda.
The Regulation on “sustainability-related disclosures in of the Authorities, will further develop technical standards 2. product level ESG disclosures. For financial
The proposals include measures to: i) create an EU
the financial services sector” was published in the Official to ensure harmonisation of disclosures in all the sectors products with sustainability (environmental or
classification system for sustainable investments – Journal of the EU in November 2019 (Regulation 2019/2088). concerned. social) characteristics or for financial products that

known as taxonomy; ii) introduce disclosures relating to All language versions of this Regulation can be found here. have sustainability objectives, financial market
The Disclosures Regulation will start to apply on 10 March During the whole EU legislative process, BIPAR stressed participants, including intermediaries who act as
sustainable investments and sustainability risks; iii) and
2021 (15 months following the publication date). The the importance of establishing a clear and consistent product providers, pension products manufacturers
establish low-carbon benchmarks and positive carbon regulatory technical standards to be developed by the legal framework and warned that if due attention is or portfolio management providers, should disclose
impact benchmarks. Joint Committee of ESAs in order to specify the details of the not paid there may be duplications of requirements in information in their: (a) pre-contractual disclosures,
presentation and content of the information to be disclosed the various sustainability-related legal texts that could (b) periodic documentation, and (c) on their website.
will start to apply on 1 January 2022. undermine legal certainty. Moreover, BIPAR expressed
Valdis Dombrovskis, Vice-President responsible for
the view that the scope of sustainability-related disclosure The consultation will be open until 1 September 2020.
Financial Stability, Financial Services and Capital Markets The Disclosures Regulation introduces transparency requirements should be limited to products marketed as Following the close of the consultation, the draft RTS will
Union¬ said: “Only with the help of the financial sector can obligations on how insurance intermediaries, investment pursuing ESG objectives and that these requirements be finalised and submitted to the European Commission.
firms and financial market participants integrate should start to apply only after a well-built taxonomy has
we fill the annual €180 billion funding gap to reach our
environmental, social and governance (ESG) risks in their been established. Finally, remuneration policies should
2030 climate and energy targets. This will help to support a investment decisions and advice processes, as part of their not provide an incentive to recommend a particular (ESG)
sustainable future for generations to come”. duty to act in accordance with the best interests of their product to customers.
clients. Under this Regulation, insurance intermediaries Regulation on Taxonomy – Ecolabels – EU Green Bond
who provide advice with regard to IBIPs and investment ESAs Joint Consultation on ESG Disclosures Standard
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firms which provide investment advice are required to:
On 8 April 2020, the European Commission launched a On 23 April 2020, the three European Supervisory Following negotiations, the European Commission,
consultation on its Renewed Sustainable Finance Strategy - include in their processes and assess on a Authorities (EIOPA, ESMA and EBA - ESAs) have issued a the European Parliament and the Council of the EU
continuous basis, not only all relevant financial risks, but Consultation Paper seeking input on their proposal for reached an agreement on the final text of the Taxonomy
which builds on the 2018 Action Plan.
also all relevant sustainability risks that may have a material environmental, social and governance (ESG) disclosure Regulation in December 2019. The taxonomy will be
negative impact on the returns of financial products. standards – called Regulatory Technical Standards- for a EU-wide classification system which will provide a
Valdis Dombrovskis, Executive Vice-President for an - have in place policies on how they integrate financial market participants and financial advisers. The common language to identify what economic activities
sustainability risks in their investment advice and publish consultation paper and the draft Regulatory Technical can be considered environmentally sustainable for the
Economy that Works for People said: “We are currently
them on their websites. Standards relate to several disclosure obligations purposes of determining the degree of sustainability of
battling the coronavirus outbreak, but we must not lose
- include in their remuneration policies information laid down in the Regulation on sustainability-related an investment.
sight of our long-term sustainability objectives, including on how their remuneration policies are consistent with disclosures in the financial services sector (Disclosures
making Europe climate-neutral by 2050. Creating a more the integration of sustainability risks, and publish that Regulation). This dossier is of particular importance for The Taxonomy will based on six EU environmental
information on their websites. insurance and financial intermediaries as they fall within objectives:
sustainable and resilient economy will be a key focus
the scope of the Disclosures Regulation. 1. climate change mitigation;
of the recovery phase and the Renewed Sustainable 2. climate change adaptation;

Finance Strategy will be essential to mobilising much- The draft Regulatory Technical Standards are proposed 3. sustainable use and protection of water and
with regards to the publication of: marine resources;
needed capital. This consultation is an opportunity for all
4. transition to a circular economy;
Europeans, companies, civil society organisations and 1. entity-level principal adverse impact disclosures. 5. pollution prevention and control; and
public authorities to contribute to the EU’s sustainable Financial advisers should publish on their website 6. protection and restauration of biodiversity and

finance agenda, and how it can contribute to the economic an “adverse sustainability impacts statement” which ecosystems.
recovery”.
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