On 24th May 2018, the Commission presented a package of measures as a follow-up to its action plan on financing sustainable growth published in March 2018. This package includes three legislative proposals and a consultation on draft delegated acts.
- Measure number one: Taxonomy
The proposal aims at establishing a unified EU classification system of sustainable economic activities (‘taxonomy’). Step by step, the Commission will identify activities which qualify as ‘sustainable’, taking into account existing market practices and initiatives and drawing on the advice of a technical expert group that is currently being set up.
It may serve as the basis for the future establishment of standards and labels ( EU Eco labels) for sustainable financial products, as announced in the Commission Action Plan on Sustainable Finance.
- Measure number two: Disclosure
The proposal aims at improving disclosure requirements on how institutional investors integrate environmental, social and governance (ESG) factors in their risk processes. In addition, those asset managers and institutional investors would have to demonstrate how their investments are aligned with ESG objectives and disclose how they comply with these duties. Exact requirements will be further specified through Delegated Acts, which will be adopted by the Commission at a later stage.
- Measure number three: Benchmarks
The proposal aims at creating a new category of benchmarks which will help investors compare the carbon footprint of their investments, comprising the low-carbon benchmark or “decarbonised” version of standard indices and the positive-carbon impact benchmarks.
Consultation on delegated acts for MiFID II and IDD
The Commission consulting on draft amendments to delegated acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive (IDD). These feedbacks have to be sent to the European Commission within 4 weeks.
These draft amendments focus on including ESG considerations into the advice offered to individual investors by the invesment firms and insurance distributors.
The proposals published today will now be discussed in the European Parliament and the Council, in view of their future adoption.
In the meantime, the European Commission with the help of the expert group it is currently setting up, will be working further on taxonomy and green bonds standards, and amongst other, corporate reporting.
Is is also important to mention that although the work of the European Commission is currently focused on « green » issues, the aim is to expand these principles to socially sustainable activities in the future.
- Proposal for a regulation on the establishment of a framework to facilitate sustainable investment: Text of the proposal
- Proposal for a regulation on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341: Text of the proposal
- Proposal for a regulation amending Regulation (EU) 2016/1011 on low carbon benchmarks and positive carbon impact benchmarks: Text of the proposal
- Impact assessment covering the 3 legislative proposals:
- Draft amendments to delegated acts:
- Commission draft delegated regulation amending Regulation (EU) 2017/565 supplementing Directive 2014/65/EU as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that directive
- Commission draft delegated regulation amending Delegated Regulation (EU) 2017/2359 with regard to environmental, social and governance preferences in the distribution of insurance-based investment products
By Aurélie CASSOU, ABBL & ALFI Senior Adviser, European Affairs