13 October 2022

BEUC: MiFID II Sustainability Requirements

On the path to a greener and more sustainable economy, consumers face an additional challenge: the risk of greenwashing when their investments are directed to activities that are not aligned with their interests and values.

Why it matters to consumers Investment products are by nature very complex products that consumers find difficult to understand. This means that consumers are exposed to a number of risks and practices which can have very detrimental consequences on consumers’ financial interests. The new MiFID II Delegated Regulation is of great importance in the green transition since it introduces the mandatory assessment of client sustainability preferences during the suitability assessment. It is however essential that consumers can make informed decisions about their investments following their true sustainability preferences free of biased advice and therefore the ESMA guidelines on certain aspects of the MiFID II sustainability requirements must close open loopholes.

Summary

BEUC, the European Consumer Organisation, welcomes the opportunity to comment on the update of ESMA guidelines on certain aspects of the MiFID II sustainability requirements.
On the path to a greener and more sustainable economy, consumers face an additional challenge: the risk of greenwashing when their investments are directed to activities that are not aligned with their interests and values. Thus, the ESMA guidelines on certain aspects of the MiFID II sustainability requirements must close loopholes that would allow financial advisors to steer consumers to their most profitable products, without taking sufficient account of the true investment preferences of the customer. To do so, we recommend that the guidelines ensure that:
- consumers are able to understand the consequences emerging from their sustainability preferences;
- consumers’ sustainability assessment reflects the real interest and values of the client;
- consumers should be able to rank their preferences in order of importance;
- consumers should be made aware that there may be controversial activities for which specific disclosure obligations exist as is the case of the proposed taxonomy Delegated Act as regards economic activities in certain energy sectors;
- consumers can express preferences regarding creating a transitional impact versus a preference to hold sustainable assets that do not contribute to financing transition but are free of harm;
- consumers should be asked whether their sustainability preferences have changed;
- consumers should be informed that sustainability-oriented products might be available elsewhere on the market in case the firm cannot match the consumers’ sustainability preferences with its own portfolio, before recommending the client to amend their sustainability preferences;
- consumers can amend their sustainability preferences, keeping a record of the different changes made by the consumers, in full compliance with the General Data Protection Regulation.

Full paper

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