{"id":17713,"date":"2022-09-17T14:08:08","date_gmt":"2022-09-17T14:08:08","guid":{"rendered":"http:\/\/legalblog.ie\/?p=17713"},"modified":"2022-09-25T14:21:12","modified_gmt":"2022-09-25T14:21:12","slug":"sustainability-disclosures","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/sustainability-disclosures\/","title":{"rendered":"Sustainability Disclosures [EU]"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#Sustainability-related_disclosures_in_the_financial_services_sector\" title=\"Sustainability-related disclosures in the financial services sector\">Sustainability-related disclosures in the financial services sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#Entity_level_transparency_transparency_by_financial_market_participants_and_financial_advisers\" title=\"Entity level transparency \/ transparency by financial market participants and financial advisers\">Entity level transparency \/ transparency by financial market participants and financial advisers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#Financial_product_transparency\" title=\"Financial product transparency\">Financial product transparency<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#European_supervisory_authorities\" title=\"European supervisory authorities:\">European supervisory authorities:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#Application_Background\" title=\"Application &amp; Background\">Application &amp; Background<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#KEY_TERMS\" title=\"KEY TERMS\">KEY TERMS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/sustainability-disclosures\/#MAIN_DOCUMENT\" title=\"MAIN DOCUMENT\">MAIN DOCUMENT<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Sustainability-related_disclosures_in_the_financial_services_sector\"><\/span>Sustainability-related disclosures in the financial services sector<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Regulation (EU) 2019\/2088 on sustainability-related disclosures in the financial services sector<\/p>\n<p>&nbsp;<\/p>\n<p>It lays down harmonised transparency rules for financial market participants* and financial advisers* on how they integrate environmental, social and good governance factors into their investment decisions and financial advice and on their overall and product-related sustainability ambition. It is designed to limit possible \u2018greenwashing\u2019 where financial products* marketed as sustainable or climate friendly, or claims about financial entity involvement, do not in practice satisfy those standards.<br \/>\nWhile the regulation sets out rules on disclosures, it effectively requires financial market participants and financial advisers to make strategic business and investment decisions, which they must then disclose.<\/p>\n<p>The regulation brings further accountability, discipline and efficiency to financial markets and accelerates the competition on the fast-developing segment of sustainable finance, improves sustainability performance-related information and comparability to end investors as well as data and information to policymakers, supervisors, academia and civil-society organisations.<br \/>\nWith comparable and reliable sustainability-related information on risks and impacts of investments, the regulation complements other initiatives fostering the financial system\u2019s transition towards sustainability and continues to support businesses that are already sustainable.<\/p>\n<p>The regulation makes a clear distinction between outside-in sustainability risks (environmental, social or governance (ESG) events or conditions that, if they occur, could cause an actual or a potential material negative impact on the value of an investment) and adverse impacts on sustainability matters (negative externalities on ESG spheres). The regulation also clarifies the potential positive sustainability impacts of investing.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Entity_level_transparency_transparency_by_financial_market_participants_and_financial_advisers\"><\/span>Entity level transparency \/ transparency by financial market participants and financial advisers<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Financial market participants and financial advisers must publish on their websites:<\/p>\n<p>information on how they consider the negative externalities of their business models, namely the principal adverse impacts of investment decisions or financial advice on ESG sustainability; or<br \/>\ninformation explaining why they consider there to be no such negative impact.<br \/>\nThe websites of financial market participants and financial advisers must also include information on how:<\/p>\n<p>they integrate sustainability risks into their investment decision-making process and financial advice;<br \/>\ntheir remuneration policies are consistent with integrating sustainability risks.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Financial_product_transparency\"><\/span>Financial product transparency<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Sustainable financial products with various degrees of ambition have been developed to date. This is why this regulation distinguishes between the transparency requirements:<\/p>\n<p>for financial products that promote environmental or social characteristics; and<br \/>\nfor financial products that aim to have a positive impact on the environment and on society.<\/p>\n<p>The two categories of financial products must explain how their ESG sustainability is to be achieved in pre-contractual financial product-related documents* and has been achieved in periodic financial product-related documents*.<\/p>\n<p>In addition, all financial products must:<\/p>\n<p>specify in pre-contractual documents how sustainability risks are integrated into investment decisions; and<br \/>\nidentify the possible impact on an investment\u2019s profitability.<br \/>\nSimilar rules apply to financial advisers. Financial market participants that consider principal adverse impacts on sustainability matters must also explain whether, and, if so, how their financial products consider principal adverse impacts.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"European_supervisory_authorities\"><\/span>European supervisory authorities:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>draft the necessary regulatory technical standards on the content, methodology and presentation of the relevant information and submit these to the European Commission, by 30 December 2020, 30 December 2021, 1 June 2021 and 1 June 2022;<br \/>\ndraft the implementing technical standards to determine the standard presentation of information on the promotion of environmental or social characteristics and sustainable investments;<br \/>\nreport to the Commission by 10 September 2022, and annually thereafter, on best practices and make recommendations on voluntary reporting standards.<\/p>\n<p>The report is made public and forwarded to the European Parliament and the Council of the European Union.<\/p>\n<p>Member States:<\/p>\n<p>ensure the relevant authorities monitor compliance with the legislation;<br \/>\nmay apply the regulation to manufacturers of pension products operating national social security schemes, and microinsurance intermediaries and investment firms.<\/p>\n<p>The Commission:<\/p>\n<p>can adopt regulatory and implementing technical standards;<br \/>\nevaluates the legislation by 30 December 2022 and considers whether to propose any amendments.<br \/>\nThe regulation does not automatically apply to:<\/p>\n<p>insurance intermediaries that provide advice on insurance-based investment products;<br \/>\ninvestment firms that provide investment advice and are enterprises irrespective of their legal form.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Application_Background\"><\/span>Application &amp; Background<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It has applied since 10 March 2021, with the exception of the rules on the transparency of adverse sustainability impacts at entity level as far as they apply to financial market participants exceeding an average of 500 employees during the financial year and to market participants which are parent undertakings of a large group exceeding, on a consolidated basis, 500 employees during the financial year. In these cases, it has applied since 30 June 2021.<\/p>\n<p>Harmonised rules enable end investors to be informed on the ESG impact of different financial products in different European Union (EU) Member States.<br \/>\nInstitutional investors, such as asset managers, pension funds or life insurance companies, invest on their clients\u2019 behalf. Strict EU legal requirements covering a wide range of financial products, stretching from investment funds to personal pension products, ensure these investors act in their clients\u2019 best interests.<\/p>\n<p>The regulation introduces additional disclosure requirements on the environmental and social impact of investment decisions.<br \/>\nIt is designed to limit possible \u2018greenwashing\u2019 where products or services marketed as sustainable or climate friendly do not in practice satisfy those standards.<br \/>\nFor further information, see:<\/p>\n<p>Sustainability-related disclosure in the financial services sector (European Commission).<\/p>\n<h3><span class=\"ez-toc-section\" id=\"KEY_TERMS\"><\/span>KEY TERMS<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Financial market participant. All financial entities managing their clients\u2019 money through financial products and that are:<br \/>\nan insurance undertaking which provides an insurance-based investment product (IBIP)*<br \/>\nan investment firm which provides portfolio management;<br \/>\nan institution for occupational retirement provision (IORP);<br \/>\na manufacturer of a pension product;<br \/>\nan alternative investment fund manager (AIFM);<br \/>\na pan-European personal pension product (PEPP) provider;<br \/>\na manager of a qualifying venture capital fund registered in accordance with Article 14 of Regulation (EU) No 345\/2013;<br \/>\na manager of a qualifying social entrepreneurship fund registered in accordance with Article 15 of Regulation (EU) No 346\/2013;<br \/>\na management company of an undertaking for collective investment in transferable securities (UCITS); or<br \/>\na credit institution which provides portfolio management.<br \/>\nFinancial adviser. This term covers all of the following, namely:<br \/>\nan insurance intermediary that provides insurance advice with regard to IBIPs;<br \/>\nan insurance undertaking that provides insurance advice with regard to IBIPs;<br \/>\na credit institution that provides investment advice;<br \/>\nan investment firm that provides investment advice;<br \/>\nan alternative investment fund manager that provides investment advice in accordance with Directive 2011\/61\/EU (on hedge and private equity funds); or<br \/>\na UCITS management company that provides investment advice in accordance with Directive 2009\/65\/EC on UCITS.<\/p>\n<p>Insurance-based investment products (IBIPs). A range of investment products marketed to retail investors which are subject to an investment risk. They include structured financial products, such as options, which are packaged in insurance policies.<\/p>\n<p>Financial products. Investments, such as:<br \/>\na portfolio<br \/>\nan alternative investment fund (AIF)<br \/>\nan IBIP<br \/>\na pension product or scheme<br \/>\na UCITS or<br \/>\na PEPP.<\/p>\n<p>Pre-contractual financial product-related documents. Documents that share information about financial products prior to an investor taking a decision to invest.<br \/>\nPeriodic financial product-related documents. Reports, generally issued on an annual basis, concerning the performance of specific financial products.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"MAIN_DOCUMENT\"><\/span>MAIN DOCUMENT<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Regulation (EU) 2019\/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, pp. 1\u201316).<\/p>\n<p>Successive amendments to Regulation (EU) 2019\/2088 have been incorporated into the original text. This consolidated version is of documentary value only.<\/p>\n<p>RELATED DOCUMENTS<br \/>\nRegulation (EU) 2019\/1238 of the European Parliament and of the Council of 20 June 2019 on a Pan-European Personal Pension Product (PEPP) (OJ L 198, 25.7.2019, pp. 1\u201363).<\/p>\n<p>Directive (EU) 2016\/2341 of the European Parliament and of the Council of 14 December 2016 on the activities and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, pp. 37\u201385).<\/p>\n<p>Directive (EU) 2016\/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (OJ L 26, 2.2.2016, pp. 19\u201359).<\/p>\n<p>See consolidated version.<\/p>\n<p>Regulation (EU) 2015\/760 of the European Parliament and of the Council of 29 April 2015 on European long-term investment funds (OJ L 123, 19.5.2015, pp. 98\u2013121).<\/p>\n<p>Directive 2014\/65\/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002\/92\/EC and Directive 2011\/61\/EU (OJ L 173, 12.6.2014, pp. 349\u2013496).<\/p>\n<p>See consolidated version.<\/p>\n<p>Directive 2013\/36\/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002\/87\/EC and repealing Directives 2006\/48\/EC and 2006\/49\/EC (OJ L 176, 27.6.2013, pp. 338\u2013436).<\/p>\n<p>See consolidated version.<\/p>\n<p>Regulation (EU) No 345\/2013 of the European Parliament and of the Council of 17 April 2013 on European venture capital funds (OJ L 115, 25.4.2013, pp. 1\u201317).<\/p>\n<p>See consolidated version.<\/p>\n<p>Regulation (EU) No 346\/2013 of the European Parliament and of the Council of 17 April 2013 on European social entrepreneurship funds (OJ L 115, 25.4.2013, pp. 18\u201338).<\/p>\n<p>See consolidated version.<\/p>\n<p>Directive 2011\/61\/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003\/41\/EC and 2009\/65\/EC and Regulations (EC) No 1060\/2009 and (EU) No 1095\/2010 (OJ L 174, 1.7.2011, pp. 1\u201373).<\/p>\n<p>See consolidated version.<\/p>\n<p>Directive 2009\/138\/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335, 17.12.2009, pp. 1\u2013155).<\/p>\n<p>See consolidated version.<\/p>\n<p>Directive 2009\/65\/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, pp. 32\u201396).<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-17713\" data-postid=\"17713\" class=\"themify_builder_content themify_builder_content-17713 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Sustainability-related disclosures in the financial services sector Regulation (EU) 2019\/2088 on sustainability-related disclosures in the financial services sector &nbsp; It lays down harmonised transparency rules for financial market participants* and financial advisers* on how they integrate environmental, social and good governance factors into their investment decisions and financial advice and on their overall and product-related [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[246,215],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/17713"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=17713"}],"version-history":[{"count":2,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/17713\/revisions"}],"predecessor-version":[{"id":18383,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/17713\/revisions\/18383"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=17713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=17713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=17713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}