The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.
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UK Financial Conduct Authority Consults on Extending Sustainability Disclosure Requirements Regime to Portfolio Management
04/23/2024
The U.K. Financial Conduct Authority published a consultation paper on April 23, 2024 on the possibility of extending the Sustainability Disclosure Requirements and labeling regime to portfolio management firms. Responses to the consultation should be submitted by June 14, 2024.
The SDR regime was introduced in November 2023, applying a new anti-greenwashing rule to all FCA-authorized firms and a range of disclosure, labeling and naming/marketing requirements to U.K. asset managers.
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UK Financial Conduct Authority Publishes Guidance on Anti-Greenwashing Rule
04/23/2024
On April 23, 2024, the U.K. Financial Conduct Authority published guidance on its anti-greenwashing rule, which was introduced into the FCA Handbook's Environmental, Social and Governance Sourcebook as part of the FCA's sustainability disclosure and labeling regime in November 2023. The rule requires authorized firms to ensure that references to the sustainability characteristics of products or services which they market to those in the U.K. are fair, clear and not misleading and are consistent with the sustainability characteristics of the product or service in question. The rule is intended to complement and be consistent with existing fair, clear and not misleading requirements found elsewhere in the FCA's rules (e.g., the Principles for Business and Conduct of Business Sourcebook).
The FCA's guidance sets out the regulator's expectations of firms subject to the rule. It provides that sustainability references should: (i) be correct and capable of being substantiated; (ii) be clear and presented in a way that can be understood; (iii) be complete (with no omission of important information); and (iv) make fair and meaningful comparisons with other products and services. Firms subject to the Consumer Duty should test whether their communications are likely to be understood by customers and should ensure they can understand and monitor customer outcomes and take proactive steps to investigate and correct any problems they identify. The completeness requirement means firms must make clear where aspects of a product or service could have a negative impact on sustainability. A firm issuing green bonds, for example, should be transparent about all eligible activities, including any related to optimizing the efficiency of fossil fuel production.
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UK Financial Conduct Authority Publishes Policy Statement on Sustainability Disclosure and Labeling Regime
11/28/2023
The U.K. Financial Conduct Authority published on November 28, 2023 its final policy statement on its new sustainability disclosure requirements and investment labels. The regime is intended to improve the integrity of the market and enhance consumer protection. It forms part of the U.K.'s broader strategy for enhancing protections around sustainability-related products and services, which includes guiding principles for sustainable investment funds, a Roadmap to Sustainable Investing and the 2023 Green Finance Strategy. The new rules enter into force on a staggered basis, as described below.
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EU Publishes New Sustainable Finance Package
07/11/2023
The EU published a new Sustainable finance package 2023 on June 13, 2023. The package includes:- A Proposed Regulation on the transparency and integrity of ESG rating activities, which aims to enhance the quality of ESG ratings. The Regulation will introduce an authorization and ongoing supervision regime for ESG rating providers along with certain obligations, e.g., disclosures on ratings methodologies. The proposal does not intend to harmonize the methodologies for the calculation of ESG ratings, but to increase their transparency. Third-country ESG rating providers may be able to offer their services in the EU under either equivalence, endorsement or recognition. The U.K. is currently consulting on making the provision of ESG ratings a regulated activity.
Read more.Attorney: Thomas Donegan
Topics : Climate & Sustainable Finance, Credit Ratings, Environmental, Social and Governance -
UK Government Publishes 2023 Green Finance Strategy
03/30/2023
The U.K. Government has published the 2023 Green Finance Strategy, its latest plan for mobilizing finance to support the shift to a greener financial system. The U.K. has committed to becoming a net zero economy by 2050.
The action points in the Strategy are based on two pillars: ‘Align’, which focuses on aligning financial markets with U.K. and global climate targets; and ‘Invest’, which encourages green investment. The proposals will have significant implications for corporates, financial institutions and investment firms, asset managers and financial market infrastructure providers.
Read more.Attorney: Thomas Donegan
Topics : Climate & Sustainable Finance, Environmental, Social and Governance -
UK Government Consults on Regulation of ESG Ratings Providers
03/30/2023
As part of its new Green Finance Strategy, HM Treasury has published a consultation paper on proposals to regulate providers of environmental, social and governance ratings. Such ratings providers offer assessments on a firm’s exposure to ESG risks or a firm’s impact on ESG matters. HM Treasury has found that these assessments increasingly trigger responses in financial markets and should therefore be subject to regulation. Responses to the consultation should be submitted by June 30, 2023.
Read more.Attorney: Thomas Donegan
Topics : Climate & Sustainable Finance, Environmental, Social and Governance -
International Organization of Securities Commissions Publishes Consultation and Discussion Paper on Carbon Markets
11/09/2022
The International Organization of Securities Commissions has published a consultation on Compliance Carbon Markets and a separate discussion paper on voluntary carbon markets. Compliance Carbon Markets involve the issuance of carbon allowances by regional, national or state bodies. Companies are obligated to participate in the schemes to "pay" for their emissions. These markets are governed by regulations set at regional, state and international levels. The U.K., EU, Switzerland and California, for example, each have national Emissions Trading Schemes (as do some other countries or states). VCMs, on the other hand, involve participants who wish to offset their carbon emissions by buying carbon credits issued in relation to climate change mitigation or greenhouse gas reduction projects. VCMs are largely unregulated and, unlike Compliance Carbon Markets, are not mandatory. Instead, independent certification bodies usually check projects underlying credits for carbon reduction projects. Those credits can then be traded, either over-the-counter (which accounts for the majority of trades) or on exchanges.
Read more.Attorney: Thomas Donegan
Topics : Climate & Sustainable Finance, Environmental, Social and Governance -
FCA Publishes Consultation Paper on Sustainability Disclosure Requirements
10/25/2022
Following its 2021 Discussion Paper, the FCA has published a consultation paper setting out proposals to enhance sustainability disclosure and labeling requirements for sustainability-linked investment products. The majority of the rules will apply only to fund and asset managers, although the FCA is considering expanding this to FCA-regulated asset owners in relation to their investment products and for certain rules to apply to distributors of investment products to U.K. retail investors. The proposals are directed at fund and asset managers and portfolio managers based in the U.K. The FCA will consult separately on how these proposals apply to overseas fund and asset managers. The FCA already has climate-related disclosure rules for premium listed issuers, as well as rules for standard listed issuers and certain FCA-regulated firms (asset managers, life insurers, pure reinsurers and FCA-regulated pension providers).
Read more.Attorney: Thomas Donegan
Topics : Climate & Sustainable Finance, Consumer Protection, Environmental, Social and Governance, Funds -
European Commission Call for Advice on Greenwashing Monitoring and Supervision
08/15/2022
The European Commission has published a call for advice addressed to the European Supervisory Authorities on the monitoring and supervision of "greenwashing" across the EU. Greenwashing can broadly be understood as the misleading marketing of a company or product as being environmentally friendly or sustainable, when that is not (or not substantially) the case. The EU has introduced legislation to preserve the reliability and transparency of ESG disclosures, including the Taxonomy Regulation and Sustainable Finance Disclosure Regulation. However, the Commission considers it important to continue monitoring greenwashing risks and assess the effectiveness of supervisory activities.
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UK Government Publishes UK Infrastructure Bill
05/12/2022
The U.K. Government has published the U.K. Infrastructure Bill, a piece of legislation designed to put the U.K. Infrastructure Bank on a statutory footing. The Bank was launched in interim form in June 2021 as part of the Chancellor of the Exchequer's plan to "level up" the U.K. and help achieve the U.K.'s target of net zero emissions by 2050. It will operate in partnership with private and public sector institutions to invest in projects which promote regional growth across the U.K. and support efforts to tackle climate change. The bank will have £22bn of financial capacity (via a mixture of equity and debt capital and the ability to issue guarantees) and it is hoped that its investments will help to generate over £40bn of overall investment for its projects.
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European Supervisory Authorities Publish Consultation Paper on Sustainability Disclosures for Simple, Transparent and Standardized Securitizations
05/02/2022
The European Banking Authority, European Insurance and Occupational Pensions Authority and European Securities and Markets Authority have published a consultation on draft Regulatory Technical Standards for disclosures on sustainability indicators in simple, transparent and standardized securitizations. Responses to the consultation should be submitted by July 2, 2022.
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European Banking Authority Publishes Discussion Paper on Role of Environmental Risks in the Prudential Framework
05/02/2022
The European Banking Authority has published a discussion paper on whether, and how, environmental risks should be incorporated into the EU prudential frameworks for EU credit institutions and investment firms. The feedback received will help the EBA to determine (in accordance with its mandates under the EU Capital Requirements Regulation and EU Investment Firm Regulation) whether the EU should introduce specific prudential treatment for certain exposures and assets that are substantially linked to environmental and/or social objectives and impacts. Responses should be submitted by August 2, 2022.
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European Commission Publishes Proposed Directive on Corporate Sustainability Due Diligence
02/23/2022
The European Commission has published a proposed Directive on Corporate Sustainability Due Diligence. The proposed Directive is designed to encourage the conduct of due diligence by major companies (including regulated financial institutions) on their value chains to identify risks linked to human rights or environmental impacts. This in turn is intended to support the objectives of the European Green Deal and assist in the transition to a climate-neutral and green economy.
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European Securities and Markets Authority Publishes Call for Evidence on Climate Risk Stress Testing for Central Counterparties
02/23/2022
The European Securities and Markets Authority has published a Call for Evidence on climate risk stress testing for EU central counterparties. Responses should be submitted by April 21, 2022.
Read more. Attorney: Thomas Donegan
Topics : Environmental, Social and Governance, Financial Market Infrastructure -
Financial Stability Board Publishes 2022 Work Priorities
02/17/2022
The Financial Stability Board has published a letter to G20 Finance Ministers and Central Bank Governors outlining its work priorities for 2022, which are:
- Supporting financial market adjustment to a post-COVID-19 world: the FSB observes vulnerabilities in the financial system, such as embedded leverage in some parts of the system and rising real estate and other asset valuations, which could pose risks to stability in the event of tightening financial conditions. Uneven unwinding of pandemic support measures is also a risk and the FSB will prepare an interim report in July and final report in October on policy considerations to support a more even global pandemic recovery.
Read more.Attorney: Thomas Donegan
Topics : Environmental, Social and Governance, Financial Services, FinTech, Payment Services -
European Securities and Markets Authority Publishes Sustainable Finance Roadmap for 2022-2024
02/10/2022
The European Securities and Markets Authority has published its Sustainable Finance Roadmap for 2022-2024. The Roadmap sets out ESMA's priorities for sustainable finance over the next two years, which include: (i) tackling greenwashing and promoting transparency; (ii) building the capacity of national regulators and ESMA to understand and address the supervisory implications of new legislation and market practices; and (iii) monitoring emerging trends in environmental, social and governance markets and related risks and vulnerabilities.
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European Banking Authority Publishes Final Draft Implementing Technical Standards on Prudential Disclosures of ESG Risks
01/24/2022
The European Banking Authority has published final draft Implementing Technical Standards on Pillar 3 prudential disclosures of environmental, social and governance risks under the EU Capital Requirements Regulation. The ITS specify the type and format of information to be published in accordance with the new CRR requirements on disclosure of prudential information on ESG risks.
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FCA Publishes Policy Statements on Climate-Related Disclosures for Standard Listed Companies and FCA-Regulated Firms
12/17/2021
The FCA has published two policy statements introducing new rules and guidance on climate-related disclosures for standard listed issuers and certain other FCA-regulated firms. The Policy Statements mirror the rule imposed under the FCA's Policy Statement on climate-related disclosures for premium listed issuers.
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European Supervisory Authorities Publish Final Report on Expanded Disclosures under the EU Sustainable Finance Disclosure Regulation
10/22/2021
The European Supervisory Authorities (the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority) have published a new final report and draft Regulatory Technical Standards on disclosures to be made under the EU Sustainable Finance Disclosure Regulation. The EU SFDR was published in December 2019 and the majority of its provisions have applied since March 10, 2021.
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European Commission Publishes Study on Banks’ and Prudential Supervisors’ Integration of ESG Factors
09/27/2021
The European Commission has published a study on EU banks’ integration of environmental, social and governance factors into their risk management processes, business strategies and investment policies. The study finds that, although banks have made efforts to pursue ESG agendas, the speed and degree of integration of ESG considerations must accelerate. In addition, it finds that prudential supervisors could take more action to integrate ESG factors into their supervision of banks. Further details of the challenges facing banks and supervisors in ESG integration are set out in the study.
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UK Listings Regulator Consults on Tightening Diversity Requirements for Listed Companies
07/28/2021
The U.K. Financial Conduct Authority has opened a consultation on proposals to amend the requirements on diversity and inclusion on listed company boards and executive committees. The proposals include changes to the Listing Rules and the Disclosure and Transparency Rules, including guidance. The consultation closes on October 20, 2021. The FCA intends to publish final rules before the end of 2021 and for the new requirements to apply to accounting periods starting on or after January 1, 2022. This means that annual financial reports published for 2022 in spring 2023 would include the reporting changes.
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UK has established a new Green Technical Advisory Group
07/09/2021
HM Treasury has announced a new independent group, called the Green Technical Advisory Group, to help tackle “greenwashing” and create a U.K. green taxonomy. “Greenwashing” refers to unsubstantiated or exaggerated claims that an investment is environmentally friendly. GTAG’s main remit is to advise HM Treasury on developing and implementing a U.K. green taxonomy, comprising technical screening criteria. GTAG consists of financial services industry representatives, non-financial services representatives, taxonomy and climate experts. HM Treasury, the U.K. Financial Conduct Authority and the Bank of England will be observers. GTAG is expected to provide initial recommendations to HM Treasury as early as September of this year.
View the GTAG Terms of Reference. -
UK Regulators Open Discussion on Accelerating Diversity and Inclusion in the Financial Services Sector
07/07/2021
The U.K. Financial Conduct Authority, Prudential Regulation Authority and the Bank of England (as regulator for financial market infrastructure) have published a discussion paper on diversity and inclusion in the financial sector. Feedback to the discussion paper may be submitted until September 30, 2021. It is expected that the FCA and PRA will consult on detailed proposals in Q1 2022 and aim to issue final Policy Statements in Q3 2022. The regulators aim to develop policy, rules and guidance that set clear minimum expectations and note that they will be prepared to use their regulatory powers where a firm fails to meet those expectations. The regulators intend to introduce any new requirements proportionately.
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Financial Stability Board Publishes Roadmap on Climate-Related Financial Risks
07/07/2021The Financial Stability Board has published a series of three climate-related reports as part of its roadmap for addressing climate-related financial risks. The global risks to financial stability posed by climate change are being addressed by a number of international initiatives and the FSB hopes to utilize its diverse membership to coordinate efforts internationally. The FSB's reports are:
- a Roadmap for Addressing Climate-Related Financial Risks, which sets out a plan to address climate-related financial risks;
- a report on The Availability of Data with Which to Monitor and Assess Climate-Related Risks to Financial Stability, which reviews the availability of data to monitor and assess climate-related risks to financial stability and outlines priorities to address gaps in data; and
- a report on Promoting Climate-related Disclosures, which provides recommendations to financial regulators in developing frameworks for climate-related disclosures.
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UK Conduct Regulator Consults on Enhancing Climate-Related Disclosures for Listed Companies and Certain Regulated Firms
06/22/2021
The U.K. Financial Conduct Authority has published two consultation papers that set out new proposals on climate-related disclosure rules for listed companies and certain regulated firms. The proposals follow the introduction of climate-related disclosure rules for the most prominent listed commercial companies in December 2020 that are aligned with the recommendations of the global Taskforce on Climate-related Financial Disclosures. Responses to the consultations may be submitted until September 10, 2021. The FCA is aiming to publish its final rules and policy statements for these proposals by the end of the year.
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European Banking Authority Publishes Opinion on Disclosure Indicators and Methodology Under Taxonomy Regulation
03/01/2021
The European Banking Authority has published an opinion and a report on the key performance indicators and methodology that firms subject to the EU Taxonomy Regulation should adopt when disclosing information on the extent of their environmentally sustainable activities. The EU Taxonomy Regulation was published in June 2020 and establishes a classification system for sustainable activities to provide a consistent, EU-wide understanding of the environmental sustainability of activities and investments. The Regulation imposes an obligation upon EU firms that report under the Non-Financial Reporting Directive to disclose information on how, and the extent to which, their activities constitute economic activities that are "environmentally sustainable" for the purposes of the Taxonomy Regulation. Corporates will have to begin disclosing information on certain environmental objectives from January 2022, with disclosures on other objectives disclosed from January 2023. Most provisions of the Taxonomy Regulation have applied directly across the EU since July 12, 2020.
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European Securities and Markets Authority Publishes Final Report and Advice on KPIs and Disclosure Methodology Under Taxonomy Regulation
03/01/2021
The European Securities and Markets Authority has published a final report and advice addressed to the European Commission on the key performance indicators and methodology that firms subject to the EU Taxonomy Regulation should adopt when disclosing information on the extent of their environmentally sustainable activities. The EU Taxonomy Regulation was published in June 2020 and establishes a classification system for sustainable activities to provide a consistent, EU-wide understanding of the environmental sustainability of activities and investments. The Regulation imposes an obligation upon EU firms that report under the Non-Financial Reporting Directive to disclose information on how, and the extent to which, their activities constitute economic activities that are "environmentally sustainable" for the purposes of the Taxonomy Regulation. Corporates will have to begin disclosing information on certain environmental objectives from January 2022, with disclosures on other objectives disclosed from January 2023. Most provisions of the Taxonomy Regulation have applied directly across the EU since July 12, 2020.
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European Supervisory Authorities Publish Final Report on Disclosures Under the EU Regulation Sustainable Finance Disclosure Regulation
02/04/2021
The European Supervisory Authorities (the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority) have published a final report and draft Regulatory Technical Standards on the content, methodologies and presentation of disclosures under the EU Regulation on sustainability-related disclosures in the financial services sector. The EU SFDR was published in December 2019 and the majority of its provisions will apply from March 10, 2021. It is designed to encourage the financial services sector to disclose information about their approaches to sustainability risk and consideration of adverse sustainability impacts in the course of their businesses. The ESAs consulted on the draft RTS in April 2020. The ESAs propose that the draft RTS should apply from January 1, 2022.
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Financial Stability Board Report on Impact of Climate Change on Financial Stability
11/23/2020
The Financial Stability Board has published a report on the Implications of Climate Change for Financial Stability. The report breaks climate-related financial stability risks down into three key categories: (i) physical risks (i.e., risks of economic losses caused by natural catastrophes); (ii) transition risks (i.e., risks arising from the process of adjusting to a low carbon economy); and (iii) liability risks (i.e., risks arising from parties being held liable for losses caused by environmental damage).
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Task Force on Climate-Related Financial Disclosures Publishes 2020 Status Report and Guidance
10/29/2020
The Financial Stability Board's Task Force on Climate-Related Financial Disclosures has published its 2020 Status Report, describing progress in the global adoption of the TCFD's recommendations.
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European Banking Authority Publishes Survey on Banks' Environmental, Social and Governance Risk Disclosure Frameworks
09/17/2020
The European Banking Authority has published a survey designed to collect information on large banks' disclosure practices on environmental, social and governance risks. The EU Capital Requirements Regulation implements the Basel Committee on Banking Supervision's Pillar 3 disclosure requirements, which require banks to disclose information about their risks and risk management procedures and policies. In 2018, the Basel Committee published updated Pillar 3 requirements. The revised CRR, published in June 2019, incorporates the revised Basel Committee disclosure standards and mandates the EBA to produce draft Implementing Technical Standards to ensure comparability of the disclosures made with international non-EU active banks.
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UK Climate Financial Risk Forum Publishes 2020 Guide
07/29/2020
The U.K. Climate Financial Risk Forum has published its first guide providing practical recommendations for the financial services sector on how to respond to climate-related financial risks. The CFRF was established by the U.K. Prudential Regulation Authority and Financial Conduct Authority and is made up of industry representatives from the banking, insurance and asset management sectors, as well as others such as the London Stock Exchange Group and the Green Finance Institute. The CFRF aims to build capacity and share best practice across the finance industry in order to improve the financial services sector's response to the financial risks arising from climate change.
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EU Sustainable Finance Group Publishes Principles for Recovery and Resilience
07/15/2020
The EU Technical Expert Group on Sustainable Finance has published a statement on five high-level principles for recovery and resilience. The statement is made in the context of the EU’s current discussions about recovery and resilience in response to the coronavirus pandemic. The TEG is proposing the five principles supported by recommendations for applying the EU’s Taxonomy to the EU’s recovery plan. The Taxonomy is set out in a recently adopted EU Regulation on the establishment of a framework to facilitate sustainable investment. The Taxonomy is a classification system for sustainable activities that is designed to provide a shared understanding of the environmental sustainability of activities and investments.
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EU Sustainable Finance Taxonomy Regulation Published
06/22/2020
A new EU Regulation on the establishment of a framework to facilitate sustainable investment (commonly referred to as the Taxonomy Regulation) has been published in the Official Journal of the European Union. The Taxonomy is a classification system for sustainable activities that is designed to provide a shared understanding of the environmental sustainability of activities and investments. The Regulation sets out the environment objectives for the Taxonomy and the criteria for determining whether an economic activity qualifies as environmentally sustainable. It also makes various amendments to the Sustainable Finance Disclosure Regulation, including requiring the European Supervisory Authorities to develop regulatory technical standards specifying the content and presentation of information demonstrating that a given investment does not significantly harm relevant environmental objectives.
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European Securities and Markets Regulator Publishes 2019 Annual Report and Updated 2020 Work Program
06/15/2020
The European Securities and Markets Authority has published its 2019 Annual Report together with an updated version of its 2020 Work Program, incorporating changes in response to the COVID-19 pandemic.
ESMA’s 2019 Annual Report discusses ESMA’s work in 2019, which included: (a) the entry into force of EMIR 2.2, including significant new responsibilities for ESMA in the authorization and supervision of CCPs; (b) ESMA’s common supervisory action on the application of the revised Markets in Financial Instrument Directive’s requirements on the assessment of appropriateness, for which ESMA will consider whether any follow-up work is needed in 2020; (c) reviews of MiFID II and the Markets in Financial Instruments Regulation, including on fair access to, and lowering the cost of, market data and the consolidated tape; and (d) sustainable finance, including technical advice delivered to the European Commission on the integration of sustainability risks for investment firms and investment funds into relevant EU legislation, a report on undue short-termism in securities markets and contributions to the technical expert group on sustainable finance which is due to deliver technical advice on delegated legislation relating to the EU Benchmarks Regulation.
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European Commission Consults on Proposed EU Green Bond Standard
06/12/2020
The European Commission has published a consultation on the establishment of an EU Green Bond Standard. The EU's GBS initiative forms part of the European Green Deal, which aims to increase the EU's climate action and environmental policy ambitions. The proposed GBS will establish standards and labels for green financial products and instruments. In June 2019, the EU Technical Expert Group on Sustainable Finance published a report on the proposed GBS, setting out ten recommendations for the substance of the GBS and for how market participants and regulators could support and monitor it. In March 2020, the TEG also published a Usability Guide to the GBS, setting out the TEG's views on its application, including confirming its view that the GBS should be voluntary. The TEG's March 2020 report also included a series of recommendations for the secondary legislation to be published in connection with the EU's proposed Taxonomy Regulation. The Commission and TEG recently published joint FAQs on the EU taxonomy and GBS.
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European Commission Publishes FAQs on Sustainable Finance Initiatives
06/10/2020
The European Commission has published Frequently Asked Questions on the EU taxonomy and Green Bond Standard. The EU taxonomy is a classification system that will create a common language for sustainable activities, to help determine whether an economic activity is environmentally sustainable. The Green Bond Standard establishes labels for financial products that are judged to be "green". The taxonomy and Standard are two products of the Commission's 2018 Action Plan on Financing Sustainable growth.
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European Commission Publishes Adjusted 2020 Work Program
05/27/2020
The European Commission has published an adjusted 2020 Work Program to reflect the unexpected challenges arising from COVID-19. The Commission still intends to deliver on the commitments made under its original Work Program, published in January 2020, but has adjusted the timing of certain actions necessary to achieve its objectives. An update on the delivery and expected timing of the objectives under the adjusted Work Program are set out in an amended version of Annex 1 on the Commission’s website.
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European Central Bank Consults on Climate-Related and Environmental Risks Guide for Banks
05/20/2020
The European Central Bank has launched a consultation on its proposed guide on how Eurozone banks should manage and disclose climate-related and environmental risks in accordance with the EU prudential framework. The guide is not legally binding, but aims to raise awareness within the Eurozone banking industry of climate-related and environmental risks and to improve the management of such risks. The consultation closes on September 25, 2020.
The guide applies to significant institutions directly supervised by the ECB, although national regulators in Eurozone member states are expected to apply the guide’s expectations proportionately when supervising less significant Eurozone banks. It should be read in the context of the wider EU bank prudential framework, with particular reference to the Capital Requirements Regulation, the Capital Requirements Directive and relevant ECB guidelines. The guide includes an overview of the nature and characteristics of climate-related and environmental risks as well as the ECB’s supervisory expectations of banks’ business models and strategies, governance and risk appetite and integration of climate-related and environment risks into their credit, operational, market and liquidity risk management frameworks.
View the ECB's consultation on its Climate-Related and Environmental Risks Guide. -
European Supervisory Authorities Consult on Technical Standards on Sustainability Disclosures
04/23/2020
The European Supervisory Authorities have launched a joint consultation on proposed Regulatory Technical Standards on content, methodologies and presentation of disclosures under the EU Regulation on sustainability‐related disclosures in the financial services sector, known as the Sustainable Finance Disclosure Regulation. Responses to the consultation can be submitted until September 1, 2020.
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International Organization of Securities Commissions Highlights Cross-Border Issues in Sustainable Finance
04/14/2020
The International Organization of Securities Commissions has published a final report on Sustainable Finance and the Role of Securities Regulators and IOSCO. The report underlines the negative impact on cross-border financial activities and the investor protection concerns caused by the existence of multiple and diverse sustainability frameworks and standards, including sustainability-related disclosure, the absence of common definitions of sustainable activities and greenwashing and other challenges to investor protection.
As a result of the findings, the IOSCO Board is establishing a Board-level Task Force on Sustainable Finance. The Task Force will aim to: (i) improve sustainability disclosures by issuers and asset managers; (ii) collaborate with other international standard-setters and regulators to avoid duplicative efforts and to enhance regulatory coordination; and (iii) develop case studies and analyses of transparency, investor protection and other issues to demonstrate the practical implications.
View the report. -
European Commission Launches Consultation on Sustainable Finance Strategy
04/08/2020
The European Commission has launched a consultation on its renewed sustainable finance strategy. The consultation was proposed at the beginning of 2020 as part of the Commission’s next steps for sustainable finance. It poses a series of questions to all EU citizens, public authorities and private organizations, as well as experts with particular knowledge of finance and sustainability, on the aspects of the EU’s renewed strategy. Responses to the consultation should be submitted by July 15, 2020.
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European Commission Acknowledges Postponement of COP26
04/02/2020
The European Commission has acknowledged the U.K. Presidency's decision to postpone the UN Climate Change Conference of the Parties (commonly known as COP26) in order to focus efforts on containing COVID-19. The Commission's work to produce a plan to raise the EU's 2030 climate-change ambitions and cut greenhouse gas emissions by 50-55% compared to 1990 levels is on track to be presented by September 2020.
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EU Technical Expert Group on Sustainable Finance Publishes Final Taxonomy Recommendations
03/09/2020
The European Commission has published a final Taxonomy report of the Technical Expert Group on Sustainable Finance. The EU Taxonomy is the EU's classification system of sustainable activities, the legal basis of which is set out in the proposed Taxonomy Regulation (agreed at political level in December 2019). The proposed Taxonomy Regulation sets the environment objectives for the Taxonomy and imposes new obligations for market participants, large companies, the EU and EU Member States. The Taxonomy Regulation will be supplemented by secondary legislation that will set out detailed technical screening criteria to establish when an economic activity can be considered sustainable. The Taxonomy Report provides the TEG's final recommendations to the European Commission on certain content for much of that secondary legislation and replaces the earlier reports of the TEG.
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UK Regulator Consults on Enhancing Climate-Related Disclosures by Certain Issuers
03/06/2020
The U.K. Financial Conduct Authority has published a consultation paper on proposals to enhance climate-related disclosures by listed issuers and to clarify the existing disclosure obligations of issuers in relation to climate, environmental, social and governance matters. The FCA proposals would implement the disclosure recommendations of the Financial Stability Board's Taskforce on Climate-related Financial Disclosures. Responses to the consultation may be submitted until October 1, 2020.
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UK Launch of COP26 Private Finance Agenda
02/27/2020
The outgoing Governor of the Bank of England has announced the launch of the COP26 Private Finance Agenda. In January this year, Mark Carney was appointed as Finance Adviser for COP26 to assist the U.K. Government to build a sustainable financial system that supports the transition to a net zero emissions economy. Andrew Bailey will replace Mr. Carney as the Governor of the Bank of England from March 16, 2020. The objective of the COP26 Private Finance Agenda is for every professional financial decision to take climate change into account.
View the Bank of England's press release of the launch.
View Mark Carney's speech to launch the COP26 Private Finance Agenda. -
European Commission Seeks Feedback on Changes to Non-Financial Reporting Regime
01/30/2020
The European Commission is seeking feedback on a roadmap for its proposed changes to the Non-Financial Reporting Directive. The Directive specifies the non-financial information (e.g., regarding the environment, social issues and bribery and corruption) that large listed companies, banks and insurance companies must report on annually. The Commission has committed to review the Directive in order to strengthen firms’ reporting in this area, particularly with respect to the adequacy of reporting on sustainable investment. Policy options include: (i) revising the existing non-binding guidelines on reporting under the Directive; (ii) endorsing existing or future voluntary standards on non-financial reporting; and (iii) revising and strengthening the provisions of the Directive itself. Feedback on the roadmap should be submitted by February 27, 2020. The Commission intends to launch a further consultation on the possible revision of the Directive in Q1 2020.
View the Commission's roadmap on revision of the Non-Financial Reporting Directive. -
European Commission Publishes 2020 Work Programme
01/29/2020
The European Commission has published its 2020 Work Programme, setting out the EU’s strategic priorities for the next 12 months.
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European Commission Announces Next Steps for Sustainable Finance
01/16/2020
The European Commission has published a Communication detailing the Sustainable Europe Investment Plan that will support the European Green Deal Investment Plan. The Communication is accompanied by a proposed Regulation to establish a Just Transition Fund and a Factsheet explaining the Plan. Feedback on the proposed Regulation can be submitted until March 12, 2020.
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European Securities and Markets Authority Publishes 2020-2022 Strategic Orientation
01/09/2020
The European Securities and Markets Authority has published its Strategic Orientation for 2020-2022, setting out its longer-term objectives for regulating financial markets. The previous Strategic Orientation covered the period from 2016-2020 and so is coming to an end this year. Looking forward, ESMA aims to:- develop the EU Capital Markets Union by encouraging wider retail investor participation, which would assist with the diversification of funding sources and efficiency of capital markets;
- promote sustainable finance and long-term oriented capital markets as part of the EU's commitment to meet the UN's Sustainable Development Goals by 2030;
- examine the opportunities and risks of digitalization and technology for market participants and regulators;
- guarantee the EU's voice in financial markets, aiming to maintain the openness of EU financial markets and develop EU co-operation with third-country authorities to ensure investor protection and financial stability; and
- encourage proportionality, particularly with respect to SMEs and innovative companies, where ESMA may need to tailor its initiatives to meet its objectives.
View ESMA 2020-2022 Strategic Orientation.