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19 February 2019

MiFID II integrating sustainability risks and factors: EBF response


EBF would like to clarify the scope of the proposal, as the mandate of the Commission is clear, focusing on firms offering portfolio management and investment advice services, while ESMA seems to go beyond. As to avoid uncertainty or negative impacts, ESG principles shall be included in MiFID after the legislative proposals are finalised, all definitions adopted and fully operational.

Organisational requirements

EBF is not convinced that amending general organisational requirements for investment firms is the most appropriate way to integrate sustainability risks in their advisory process. If included, it is important to clearly identify the specific organisational requirements and provide further guidance on how they should be applied by firms.

EBF supports the high-level principle-based approach for the integration of sustainability risks within the MiFID II requirements, similar to that one already followed for all other relevant risks.

EBF would also like to remark the need of coordination with the EU proposed regulations on Sustainable Finance in order for terms and expressions to be given the same meaning.

EBF would like to see further clarifications on specific aspects of conflicts of interest.

Product Governance

Regarding market standards and “labels”, EBF advocates for a positive yet gradual approach while warning against their, sometimes, national character, and concerns with possible greenwashing.

EBF urges supervisors and legislators to embrace, as much as possible, pro-active market initiatives already set up. And to not interfere with them until the EU harmonised framework and regulation is in place.

Clients that have expressed ESG considerations may be offered “non-ESG” products if appropriately informed about this in the suitability report.

Suitability

It is essential to provide as much flexibility as possible for the methods used by firms for integrating ESG preferences within their suitability model.

Two-step approach towards clients’ preferences: Only asking detailed ESG questions when clients indicate a positive interest in ESG considerations.

Full response



© EBF


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