Sustainability‐related disclosures in the financial services sector

With its most recently published regulation EU 2019/2088 on sustainability‐related disclosures in the financial services sector, the EU aims to improve transparency on sustainability related risks and on the achievement of sustainable goals in the investment processes. This includes for instance the disclosure of likely impacts of sustainability risks on the returns of financial products in the pre-contractual documents. A framework of harmonized disclosure requirements should help investors to better understand sustainability-related aspects of financial products and to more easily compare them.

By this regulation, the Commission of the EU aims to support the achievement of the Sustainable Development Goals of the Agenda 2030 and to foster the transition to a low-carbon economy in accordance with the Paris 2015 agreement. It therefore covers a broad range of financial products like funds (UCITs and AIFs), Pension products and schemes and insurance related investment products. A specific focus lies on those which are promoted to improve specific environmental or social characteristics. Affected companies are therefore investment firms providing portfolio management, insurance companies offering insurance-based investment products and IORPs (Institutions for Occupational Retirement Provision).

On 29 December 2019, the Regulation will enter into force. A transition period of 15 months will follow. The regulation names 10 March 2021 as the date from which the new rules apply. In the course of 2020, technical regulatory standards are expected to be introduced to provide more clarity about the specific requirements. We at IDS will monitor all updates to these standards and keep you up to date.