The first formal responses to the European Commission’s consultations on its sustainable finance Action Plan have started to come in ahead of the closure of a comment period next week – with the first backing coming from Italian financial advisors body ANASF.
Just yesterday, the Commission named the new Technical Expert Group on Sustainable Finance that will take forward its first raft of legislative proposals, announced last month. These include setting up an environmental and social investment taxonomy, improving disclosure requirements on how institutional investors integrate sustainability factors in their risk processes and creating new categories of low-carbon benchmarks. On the retail side, it wants to update ‘suitability tests’ to require banks and others providers to ask customers whether environmental and social issues are important when selecting suitable financial products to offer them.
The latter proposal will be implemented by amending existing Markets in Financial Instruments Directive (MiFID II) regulation. The Commission has a consultation underway, which closes on June 21, on amendments to incorporate ESG into this and one other important piece of regulation, the Insurance Distribution Directive (IDD). The aim is for investment firms and insurance distributors to include ESG considerations into client advice.
First out of the block with its response to the MiFID and IDD plans was ANASF, the Associazione Nazionale Consulenti Finanziari, with support for both measures.
On the MiFID amendment ANASF says: “Including questions on ESG considerations helps investors become aware of sustainable finance (which is, in turn, related to long term investment solutions).“In this respect, financial advisors play a key role: by making investors aware of ESG considerations, financial advisors promote financial education and foster responsible and informed investment decisions.”
“Financial advisors play a key role”
It argues that financial advisors are “one of the most viable channels to detect and promote ESG preferences”.
Separately, ANASF is organising an ESG event in Rome on June 27 with Candriam and EticaNews.
The Commission hopes that the changes will “ensure that all financial entities that receive a mandate from their clients or beneficiaries to take investment decisions on their behalf would integrate ESG into their internal processes and inform their clients about it”. The requirements would apply to asset managers, insurance companies, pension funds, or investment advisors.
The MIFiD amendment was discussed at a closed meeting of the member state-level Expert Group of the European Securities Committee this week. The expert group linked to the insurance directive is the Commission Expert Group on Banking, Payments and Insurance, though there are no meetings listed for this body.
The consultation on benchmarks runs until August 6 while those on disclosures and taxonomy run until August 9.