IORPs shall publish and maintain the information referred to in Articles 3 to 7 and the first subparagraph of Article 10(1), of this Regulation in accordance with point (f) of Article 36(2) of Directive (EU) 2016/2341. The reason is that investment decisions and financial advice might cause, contribute to or be directly linked to negative material effects on environment and society, regardless of whether the investment strategy pursue a sustainable objective or not, such as investments in assets that pollute water or devastate bio-diversity, to ensure the sustainability of investments. The disclosure rules contained in this Regulation should supplement the provisions of Directives 2009/65/EC, 2009/138/EC, 2011/61/EU, 2014/65/EU, (EU) 2016/97 and (EU) 2016/2341, and Regulations (EU) No 345/2013, (EU) No 346/2013, (EU) 2015/760 and (EU) 2019/1238. Acting in accordance with the ordinary legislative procedure (2). COM(2018) 354 final. The Commission should be empowered to adopt those regulatory technical standards by means of delegated acts pursuant to Article 290 of the Treaty on the Functioning of the European Union (TFEU) and in accordance with Articles 10 to 14 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010. 2. By way of derogation from paragraph 1 of this Article, from 30 June 2021, financial market participants which are parent undertakings of a large group as referred to in Article 3(7) of Directive 2013/34/EU exceeding on the balance sheet date of the group, on a consolidated basis, the criterion of the average number of 500 employees during the financial year shall publish and maintain on their websites a statement on their due diligence policies with respect to the principal adverse impacts of investment decisions on sustainability factors. Those disclosures by means of periodic reports should be carried out annually. (3) Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1). Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010. As the Union is increasingly faced with the catastrophic and unpredictable consequences of climate change, resource depletion and other sustainability‐related issues, urgent action is needed to mobilise capital not only through public policies but also by the financial services sector. As a key part of the EU’s … 2. After transmission of the draft legislative act to the national parliaments. Substantial Contribution. The new Sustainable Finance Disclosure Regulation1(SFDR) introduced various disclosure-related requirements for financial market participants and financial advisors at entity, service and product level. 14 May 2020 . The evaluation referred to in paragraph 1 shall be accompanied, if appropriate, by a legislative proposal. The EU Regulation on sustainability-related disclosures in the financial services sector (the Disclosure Regulation) came into force at the end of December 2019 and will apply 15 months later. The European Commission published new Regulations on harmonised requirements in respect of sustainability-related disclosures and benchmarks contributing to sustainable finance (EU/2019/2089) (the “Disclosure Regulation”) in the Official Journal on 9 December 2019. This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. EBA, EIOPA and ESMA (collectively, the ‘ESAs’) should be mandated, through the Joint Committee, to develop draft regulatory technical standards to further specify the content, methodologies and presentation of information in relation to sustainability indicators with regard to climate and other environment‐related adverse impacts, to social and employee matters, to respect for human rights, and to anti‐corruption and anti‐bribery matters, as well as to specify the presentation and content of the information with regard to the promotion of environmental or social characteristics and sustainable investment objectives to be disclosed in pre‐contractual documents, annual reports and on websites of financial market participants in accordance with Articles 10 to 14 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010. The SFDR requires fund managers, such as those operating as alternative investment fund managers (AIFMs), to disclose how they have integrated in their processes, including in their due diligence, an assessment of all … Financial market participants shall include in the information provided in accordance with point (a) of paragraph 1 at least the following: information about their policies on the identification and prioritisation of principal adverse sustainability impacts and indicators; a description of the principal adverse sustainability impacts and of any actions in relation thereto taken or, where relevant, planned; brief summaries of engagement policies in accordance with Article 3g of Directive 2007/36/EC, where applicable; a reference to their adherence to responsible business conduct codes and internationally recognised standards for due diligence and reporting and, where relevant, the degree of their alignment with the objectives of the Paris Agreement. The new requirements distinguish between all products and financial products targeting or promoting environmental and/or … Die Verordnung (EU) Nr. When developing the draft regulatory technical standards referred to in the first subparagraph of this paragraph, the ESAs shall take into account the various types of financial products, their objectives as referred to in paragraphs 1, 2 and 3 and the differences between them as well as the objective that disclosures are to be accurate, fair, clear, not misleading, simple and concise. The ESAs should be mandated, through the Joint Committee, to develop draft implementing technical standards to determine the standard presentation of information on the promotion of environmental or social characteristics and sustainable investments in marketing communications. Consequently, these separate pieces of legislation are interdependent and often overlap. A National Climate … The ESAs may develop, through the Joint Committee, draft implementing technical standards to determine the standard presentation of information on the promotion of environmental or social characteristics and sustainable investments. EU Taxonomy Solution. It can increase the resilience of the real economy and the stability of the financial system. 2. On 8 April, the European Commission published a consultation on its renewed and ambitious sustainable finance strategy, which it aims to adopt in the second half of this year. To ensure the reliability of information published on the websites of financial market participants and financial advisers, such information should be kept up to date, and any revisions or changes to such information should be clearly explained. As regards financial products which have as an objective a positive impact on the environment and society, financial market participants should disclose which sustainable benchmark they use to measure the sustainable performance and where no benchmark is used, explain how the sustainable objective is met. On 25 September 2015, the UN General Assembly adopted a new global sustainable development framework: the 2030 Agenda for Sustainable Development (the ‘2030 Agenda’), which has at its core the Sustainable Development Goals (SDGs). Financial market participants shall include in the information to be disclosed pursuant to Article 6(1) and (3) an indication of where the methodology used for the calculation of the index referred to in paragraph 1 of this Article is to be found. The newly adopted European Regulation on Sustainable Finance Disclosure will become applicable in less than a year. 2. It is yet another indicator that environmental, social and governance matters are growing in importance as a compliance issue for financial institutions. Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures in the financial services sector, as amended. whether financial market participants and financial advisers consider negative externalities on environment and social justice of the investment decisions/advice and, if so, how this is reflected at the product level. 1. The EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), and the Non-Financial Reporting Directive (NFRD) form the bedrock of Sustainable Finance. These legislative initiatives also include the draft Taxonomy Regulation[2] which establishes a framework for classifying financial products as “sustainable investments” — a measure directed at tackling so … Europe’s regulatory landscape is shifting as the EU implements a range of initiatives to meet its international environmental commitments and targets, from its Action Plan on sustainable finance to the EU Green Deal. Financial advisers should disclose how they take sustainability risks into account in the selection process of the financial product that is presented to the end investors before providing the advice, regardless of the sustainability preferences of the end investors. 2. For the purposes of paragraph 1 of this Article, financial market participants may use the information in management reports in accordance with Article 19 of Directive 2013/34/EU or the information in non‐financial statements in accordance with Article 19a of that Directive where appropriate. Where financial market participants, taking due account of their size, the nature and scale of their activities and the types of financial products they make available, consider principal adverse impacts, whether material or likely to be material, of investment decisions on sustainability factors, they should integrate in their processes, including in their due diligence processes, the procedures for considering the principal adverse impacts alongside the relevant financial risks and relevant sustainability risks. Without prejudice to stricter sectoral legislation, in particular Directives 2009/65/EC, 2014/65/EU and (EU) 2016/97 and Regulation (EU) No 1286/2014, financial market participants and financial advisers shall ensure that their marketing communications do not contradict the information disclosed pursuant to this Regulation. SUSTAINABLE FINANCE DISCLOSURE REGULATION KEY REQUIREMENTS The EU’s Regulation on sustainability-related disclosures in the financial services sector (the SFDR) was published in December 9 and forms part of the EU’s package of measures relating to Environmental, Social and Governance (ESG) issues. Entities covered by this Regulation, depending on the nature of their activities, should comply with the rules on financial market participants where they manufacture financial products and should comply with the rules on financial advisers where they provide investment advice or insurance advice. (16)  Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ L 331, 15.12.2010, p. 48). Brussels,24.5.2018. By 30 December 2022, for each financial product where a financial market participant applies point (a) of Article 4(1) or Article 4(3) or (4), the disclosures referred to in Article 6(3) shall include the following: a clear and reasoned explanation of whether, and, if so, how a financial product considers principal adverse impacts on sustainability factors; a statement that information on principal adverse impacts on sustainability factors is available in the information to be disclosed pursuant to Article 11(2). It shall be published in a way that is accurate, fair, clear, not misleading, simple and concise and in a prominent easily accessible area of the website. Insert free text, CELEX number or descriptors. The exemption from this Regulation for financial advisers which employ fewer than three persons should be without prejudice to the application of the provisions of national law transposing Directives 2014/65/EU and (EU) 2016/97, in particular the rules on investment and insurance advice. Having regard to the opinion of the European Economic and Social Committee (1). 2. Morrison & Foerster LLP based on research provided by ECOFACT. Investment decisions and the assessment of relevant risks, including environmental, social and governance risks, should be made in such a manner as to ensure compliance with the interests of members and beneficiaries of IORPs. on sustainability‐related disclosures in the financial services sector (Text with EEA relevance) Article 1. However, such provisions should not impede the effective application of this Regulation or the achievement of its objectives. 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