European Commission Initiatives on Sustainable Finance: Draft Acts
15 Jun 2020
In addition, the Draft Delegated Acts, which adapt rules on fiduciary duties and suitability tests, seek to reinforce the:
(b) Regulation on the EU Climate Transition Benchmarks and the EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks ((EU) 2019/2089); and
Amendments to the Draft Delegated Acts
Under this delegated regulation, the risk management policy will be required to take account of sustainability risks and senior management will be responsible for the integration of those risks.
(c) Draft Commission Delegated Directive Ares(2020)2955234 clarifies that as part of the product oversight and governance process, sustainability factors and preferences should be considered within the product governance requirements in Delegated Directive (EU) 2017/593. Investment firms that manufacture and distribute financial instruments should take these sustainability factors into account in the product approval process of each financial instrument. This also applies to product governance and oversight arrangements for every financial instrument intended to be distributed to clients seeking financial instruments with a sustainability-related profile. A general statement that a financial instrument has a sustainability-related profile should not be sufficient and with regard to clients who possess specific sustainability preferences, it should be specified by the investment firms manufacturing and distributing the respective financial instruments.
It also introduces the integration of sustainability risks into the prudent person principle.
The EC's feedback period runs from 8 June 2020 to 6 July 2020. Once closed, the EC will adopt the act. In general, Parliament and Council have two months to formulate any objections. Where there are none, the Draft Delegated Acts will enter into force on the twentieth day following their publication in the Official Journal of the EU. They will become applicable 12 months after publication.Further Information
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