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 Government consults on measures to support UK sustainable finance
25 June 2025
The UK Government's Department for Energy Security & Net Zero has published a series of three consultations on proposals to help UK-regulated financial institutions and large companies to develop climate transition plans. The first consultation seeks views on proposals to implement climate-related transition plan requirements, including mandating that entities develop and disclose transition plans or explain why they have not disclosed a plan and making it a legal requirement to take steps in line with a transition plan. The consultation also considers the scope of companies that should be captured (with a focus on ensuring the requirements are proportionate and concentrate on economically significant entities).
Read more.Topic : Sustainable Finance -
UK Government publishes 10-year industrial strategy plan
23 June 2025
The UK Government has published a policy paper outlining its industrial strategy. The strategy centres around eight priority sectors (the IS-8), including financial services. The UK government's ambition is to establish the UK as the world's most innovative full-service financial centre by 2035. A dedicated sector plan is expected to be published alongside the mansion house speech on 15 July.
Key measures to achieve this objective include:- Ensuring financial services enables growth across the real economy, with retail banks and wholesale markets providing credit and liquidity.
- Mobilising pensions capital into the UK.
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Council of EU adopts negotiating position on omnibus sustainability package
23 June 2025
The Council of the EU has announced it has adopted its negotiating mandate on the Omnibus I package which proposes targeted amendments to, amongst other things, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D). The EU has already published Directive (EU) 2025/794 which implemented the "stop-the-clock" proposal, postponing the application date of aspects of CSRD and CS3D.
Read more.Topic : Sustainable Finance -
ESMA publishes statement on ESRS supervision in the omnibus environment
20 June 2025
The European Securities and Markets Authority (ESMA) has issued a public statement on its intended approach to supervision of the European Sustainability Reporting Standards (ESRS), confirming its commitment to transparent sustainability reporting while acknowledging the need for proportionality. During the first few years of ESRS application, the Guidelines for Enforcement of Sustainability Information will need to be applied proportionately and realistically. National regulators can also help by conducting informal dialogues with issuers on areas for improvement in their reporting and by bearing in mind that uncertain regulatory context in which issuers are operating. ESMA confirms national regulators will also continue to promote a harmonised supervisory approach under its coordination.Topic : Sustainable Finance -
TNFD announces new phase of work – nature related data solutions
16 June 2025
The Taskforce on Nature-related Financial Disclosures (TNFD) has announced a new phase of work to improve market access to decision-useful nature data with plans to release a set of recommendations at COP30 this year. This new phase of work will involve pilot testing and market consultations to develop technical design specifications for a proposed Nature Data Public Facility (NDPF). The pilot programme will: (i) test nature-data principles; (ii) test data quality of nature-related data set; (iii) identify nature-data gaps in need of long-term funding; and (iv) test the NDPF with downstream users to define their data needs and inform design specifications. TNFD will also launch a grand challenge to encourage the development of new technology solutions to enable small and medium-sized enterprises to rapidly assess their nature-related issues globally. The pilot testing will run until October and involve a wide range of global implementation partners as well as a diverse group of over 40 upstream nature data providers and more than 20 downstream nature data users and market intermediaries across markets and sectors.Topic : Sustainable Finance -
BCBS voluntary framework for disclosure of climate-related financial risks
13 June 2025
The Basel Committee on Banking Supervision (BCBS) has released a framework for the voluntary disclosure of climate-related financial risks, alongside an updated webpage and press release. This framework, which builds on the November 2023 consultative document and forms part of the BCBS's broader efforts to strengthen the resilience of the banking system to climate-related risk, is designed to operate within the Pillar 3 disclosure framework. It aims to enhance financial stability by providing banks with structured guidance for disclosing both qualitative and quantitative climate-related financial risks. While the BCBS agreed for the framework to be voluntary in nature, jurisdictions may choose to implement it domestically. The framework is structured around a series of qualitative tables and quantitative templates.
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EBA consults on draft ITS on Pillar 3 disclosure frameworks
22 May 2025
The European Banking Authority (EBA) has published a consultation paper (CP) proposing amendments to Commission Implementing Regulation (EU) 2024/3172 on the EBA Pillar 3 disclosure framework, aligning it with the requirements of revised Capital Requirements Regulation (CRR3) on ESG-related risks, equity exposures and aggregate exposure to shadow banking entities. The CP also seeks to finalise the implementation of prudential disclosure requirements included in the EU banking package published in 2024. Through the amendments, the EBA aims to improve the transparency and consistency of disclosures while also simplifying the reporting process for institutions. The EBA also intends to provide an updated mapping tool to help institutions align Pillar 3 disclosures with supervisory reporting requirements. The deadline for comments to the consultation paper is 22 August. The final ITS are expected to be submitted to the European Commission by Q4 2025. -
IOSCO Sustainable Bonds Report
21 May 2025
The International Organization of Securities Commissions (IOSCO) has published its sustainable bonds report with a press release, identifying key characteristics and growth trends for the sustainable bond market, which had surpassed USD 5.7 trillion in cumulative issuances in 2024.The report examines the characteristics of sustainable bonds, which include green, social, sustainability-linked and transition bonds. It also sets out five key considerations to assist regulators with addressing market challenges, including enhancing investor protection, ensuring fair and efficient sustainable bond markets and improving accessibility.
These are:- To ensure greater clarity in existing or new regulatory frameworks to demonstrate alignment with internationally accepted principles and standards, support consistency, build investor confidence and support market participation.
- To establish guiding principles to help provide clarity and consistency when categorising sustainable bond types.
- To enhance transparency and disclosure requirements when it comes to reporting on issuers' progress toward sustainability-related goals or sustainability performance targets to promote public accountability.
- To promote the use of independent and credible external reviewers to mitigate conflicts of interest.
- To utilise capacity building and educational programs to increase awareness and understanding of sustainable bonds among issuers, investors, intermediaries and regulator.
Topic : Sustainable Finance -
EBA 2024 annual report on Work Programme Achievements – Part 1
20 May 2025
The European Banking Authority (EBA) has published part 1 of its 2024 annual report, with a press release, reflecting on key regulatory and supervisory achievements under its work programme over the past year. These include: (i) progress in the implementation of the Basel III reforms; (ii) the further integration of ESG considerations into regulatory frameworks, via the issuance of guidelines and reports on ESG risks, greenwashing and scenario analysis; (iii) the assessment of financial stability amid high interest rates and geopolitical uncertainties, supported by two risk assessment reports; (iv) the enhancement of regulatory data infrastructure through the EUCLID platform; (v) the development of oversight and supervisory capacity for firms subject to the EU Digital Operational Resilience Act (DORA) and the EU Markets in Crypto-Assets Regulation (MiCAR); and (vi) an enhanced focus on innovation and consumers (including access to financial services) while preparing for the transition to the new anti-money laundering and counter-terrorist financing (AML/CFT) framework. -
ESMA consultation on transparency and integrity of ESG rating activities
2 May 2025
The European Securities and Markets Authority (ESMA) has published a consultation paper on draft regulatory technical standards (RTS) on the transparency and integrity of environmental, social and governance (ESG) rating activities under Regulation (EU) 2024/3005. This was published together with a press release. The Regulation introduces a common regulatory approach to enhance the integrity, transparency, comparability where possible, responsibility, reliability, good governance and independence of ESG rating activities, and seeks to contribute to the transparency and quality of ESG ratings and to the sustainable finance agenda of the EU. ESMA is mandated to deliver draft RTS in relation to authorisation, recognition, separation of activities and disclosures. The draft RTS sets out the aspects that apply to ESG rating providers, including:- The information that should be provided in the applications for authorisation and recognition.
- The measures and safeguards that should be put in place to mitigate risks of conflicts of interest within ESG rating providers who carry out activities other than the provision of ESG ratings.
- The information that they should disclose to the public, rated items and issuers of rated items, as well as users of ESG ratings.
Topic : Sustainable Finance -
EC call for evidence for the revision of SFDR
2 May 2025
The European Commission (EC) has published a call for evidence to inform the revision of the Sustainable Finance Disclosure Regulation (SFDR), which is planned for Q4 2025. The focus of the review will be to address burdens (including regulatory reporting burdens) and simplify and streamline requirements. This call for evidence follows a previous assessment of the SFDR, which included both a targeted and a public consultation, and will inform an impact assessment to support the review of the regulation. To date, feedback on the SFDR has identified areas for improvement, including: (i) legal certainty on key concepts; (ii) relevance of certain disclosure requirements; (iii) overlaps and inconsistencies with other sustainable finance requirements; and (iv) issues in relation to data availability. In addition, there is broad support for a revised SFDR that would (i) cater for different types of investors and financial product; (ii) facilitate retail investor understanding; (iii) consider international reach and exposure; and (iv) direct investment towards diverse sustainability-oriented aims while avoiding greenwashing. In terms of broader impact, by improving clarity and consistency and addressing data-availability issues, the review should reduce operational and compliance costs, to achieve the objectives of the legislation, and facilitate sustainable investing. The deadline for comments is 30 May.Topic : Sustainable Finance -
FMSB Statement of good practice on the governance of sustainability-linked products
30 April 2025
The Financial Markets Standards Board (FMSB) has issued a Statement of Good Practice (SoGP) on the governance of sustainability-linked products (SLPs), along with a press release. SLPs are products where the financial and/or structural characteristics can vary depending on whether the user (i.e., borrower or issuer of, or counterparty to, SLPs) achieves specific sustainability or ESG objectives. They can be used for general corporate purposes, which allows many users (e.g., borrowers, issuers or counterparties to SLPs) to access the sustainable finance market in a more flexible way. With the growth of SLP issuances and accompanying concerns around the credibility of such instruments, the SoGP is intended to: (i) codify good practices for the governance of SLPs and (ii) support the adoption of consistent governance approaches across asset classes and jurisdictions. This is aimed to enhance the quality and integrity of SLPs; boost market confidence; help mitigate greenwashing risk; and support the development of a deeper, more robust sustainability-linked product market. The SoGP will apply to service providers (e.g., firms acting as sustainability-linked loan lenders, bookrunners or lead arrangers on a sustainability-linked bond issuance or counterparties to a sustainability-linked derivative) or users of SLPs in wholesale financial markets and to support, and be read in conjunction with, existing asset-class specific guidance (notably ICMA, LMA and ISDA principles). -
ESMA issues guidelines on the enforcement of sustainability information
29 April 2025
The European Securities and Markets Authority (ESMA) has published official translations of the guidelines, on the enforcement of sustainability information under the Transparency Directive (for background, please see our update). The guidelines are based on Article 28d of the Transparency Directive and aim to establish consistent and effective supervisory practices for all competent authorities to ensure that sustainability information provided by issuers, who have securities admitted to trading on a regulated market and who are required to publish sustainability information under the Accounting Directive, comply with the requirements of Article 24(4) of the Transparency Directive. The guidelines cover, among other things: (i) the objective of enforcement, (ii) ensuring an effective enforcement process, (iii) sustainability information prepared under equivalent third country sustainability reporting requirements, (iv) enforcers maintaining adequate independence from all stakeholders, and (v) the choice of enforcement actions. The guidelines shall apply to the enforcement of sustainability information published from 1 January. Competent authorities must notify ESMA within two months whether they (i) comply; (ii) do not comply, but intend to comply, or (iii) do not comply and do not intend to comply with the guidelines, along with their reasons for not complying.Topic : Sustainable Finance -
FCA update on extending SDR regime to portfolio managers
29 April 2025
The UK Financial Conduct Authority (FCA) has updated its webpage summarising feedback to its consultation paper, CP24/8, on extending the sustainability disclosure requirements (SDR) and labelling regime to portfolio managers. This follows a previous update from the FCA, which announced it would no longer publish a policy statement this year. Key feedback to the consultation paper covers proposals on scope, implementation deadlines, labelling portfolios, naming and marketing and disclosures. While there is broad support for the proposals, the feedback highlights the need for more time to address practical challenges and ensure effective implementation of the regime before introducing requirements. As such, the FCA has decided it is not the appropriate time to finalise the rules on extending SDR to portfolio management. The FCA will instead prioritise the multi-firm review into model portfolio services to ensure compliance with the consumer duty and improve good outcomes from model portfolio services. Firms are also reminded to adhere to the anti-greenwashing rule, effective from 31 May 2024.Topic : Sustainable Finance -
Omnibus I 'stop-the-clock' directive published in Official Journal of the EU
16 April 2025
The Directive (EU) 2025/794, amending the EU Corporate Sustainability Reporting Directive (CSRD) and EU Corporate Sustainability Due Diligence Directive (CSDDD), was published in the Official Journal of the EU (OJ), implementing the "stop-the-clock" proposal discussed under the EU Omnibus I package. The Directive entered into force on 17 April. Member states must transpose the Directive by 31 December.
The Directive postpones:- by two years, the application of CSRD reporting requirements to large companies that have not yet started reporting and SMEs. These entities will now have to report in 2028 and 2029, respectively, for financial years starting on or after 1 January 2027 and 1 January 2028 (as applicable); and
- by one year, the transposition deadline and first phase of application of certain due diligence provisions under CSDDD. EU Member States will now have until 26 July 2027 to transpose CSDDD, and the first companies will not have to apply the first phase of measures until 26 July 2028.
Topic : Sustainable Finance -
ESMA TRV report on fund names: ESG-related changes and their impact on investment flows
10 April 2025
The European Securities and Markets Authority (ESMA) has published a trends, risks and vulnerabilities (TRV) risk analysis report on ESG-related changes to fund names and their impact on investment flows. The report examines whether the fund managers decision to incorporate environmental, social, governance or sustainability-related (ESG) terms into their funds' names leads to more investor interest. If so, this has the potential to incentivise greenwashing behaviour, undermine investor trust and hinder efforts to promote sustainability within EU financial markets.
Read more.Topic : Sustainable Finance -
EU recommendations on ESG disclosures under the Benchmarks Regulation
9 April 2025
The European Securities and Markets Authority (ESMA) has published a final report on the outcome of the 2024 Common Supervisory Action (CSA) on ESG disclosures under the Benchmarks Regulation (BMR). The CSA was conducted by ESMA with national competent authorities and assessed how benchmark administrators supervised in the EU comply with the BMR's ESG disclosure requirements. The report presents the findings of the CSA, including that: (i) the lack of specific guidance on the definition and calculation of ESG factors has led to divergent and inconsistent calculation and disclosure practices across benchmarks and administrators; and (ii) there are inconsistent approaches to the underlying assumptions used by administrators for determining the factors. The CSA report recommends that the European Commission considers amendments such as rationalising ESG disclosure requirements, for which ESMA would be able to assist with technical advice. The report also provides clarifications for administrators on transparency expectations and guidance on definitions and methodology used for calculating ESG factors.Topic : Sustainable Finance -
European Parliament votes to delay sustainability and due diligence requirements
3 April 2025
The European Parliament has voted in favour of its 'stop the clock proposal' to delay the application of new sustainability reporting and due diligence under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The delay was proposed as part of the European Commission's (EC) "Omnibus I" simplification package, designed to address overlapping or disproportionate rules that are creating unnecessary burdens for EU businesses. The proposal postpones the application of CSRD reporting requirements for companies due to report in 2026 and 2027 (referred to as second and third wave companies), and postpones the transposition deadline and first wave application of the CSDDD by one year (to 2028). The EC had invited the co-legislators to prioritise this proposal in particular, and the Council of the EU endorsed the proposal on 26 March. The draft rules will need to be formally approved by the Council, and then can enter into force.Topic : Sustainable Finance -
UK FCA feedback on responses to discussion paper on finance for positive sustainable change
2 April 2025
The UK Financial Conduct Authority (FCA) has published feedback on the views it received in response to its discussion paper DP 23/1 on finance for positive sustainable change. The discussion paper included sections on a number of areas including business strategy, senior management, accountability, incentives, remuneration and training. The feedback notes that a common theme across responses was the need to wait for new regulation in this area, for example the consumer duty and sustainability disclosure requirements (SDR), to become embedded and a number of responses considered that the existing rules were sufficient. The FCA confirms that it is not currently considering introducing new rules on the discussion paper topics (although notes that since DP 23/1 was published, certain new rules have been introduced including the SDR and labelling rules, and the anti-greenwashing rule). The FCA does, however, confirm that it will continue to monitor developments and promote the themes covered by the discussion paper to help the sustainable finance market grow and promote the UK as a leading financial centre.Topic : Sustainable Finance -
EU platform on sustainable finance reports on technical criteria for new activities and review of the Climate Delegated Act
1 April 2025
Following its call for feedback on a draft report, The Platform on Sustainable Finance, an advisory body to the European Commission (EC) has published a final report on technical criterial for new activities and first review of the Climate Delegated Act. The report covers the activities and technical screening criteria to be updated or included in the EU taxonomy. The report sets out recommendations relating to: (i) the review of the criteria and analysis for the EU Taxonomy Climate Delegated Act; (ii) new activities mandated by the European Commission; (iii) new activities mandated by the European Commission but not completed; and (iv) further recommendations for climate change adaptation.Topic : Sustainable Finance -
EU Platform on Sustainable Finance publishes updated handbook on climate transition and Paris-aligned benchmarks
28 March 2025
The Platform on Sustainable Finance, an advisory body to the European Commission (EC) has published an updated version of its handbook on Climate Transition Benchmarks and Paris-Aligned Benchmarks (version 2), and has also updated its webpage. The first version of the Handbook was published in December 2019, and was in response to frequently asked questions (FAQs) faced by the TEG benchmarks subgroup members when presenting the EU Climate Transition Benchmark (EU CTB), the EU Paris Aligned Benchmark (EU PAB) , and the benchmarks' disclosure guidance on environmental, social or governance (ESG) issues. The updated version covers clarifying (i) the 7% Reduction Trajectory, (ii) matters of terminology, explaining (iii) the anti-greenwashing measures, (iv) data sources and estimation techniques (v) related classification, and (vi) ESG disclosure matters. Each response to a FAQ in the updated version will also now indicate whether it is from 2019 or 2025, as well as referring to which publications of the TEG, may be relevant.Topic : Sustainable Finance -
EU Platform on Sustainable Finance response to Taxonomy Delegated Act consultation
26 March 2025
The Platform on Sustainable Finance, an advisory body to the European Commission (EC) established under Article 20 of the Taxonomy Regulation, has published its response to the EC's Taxonomy Delegated Act consultation.
The Platform is broadly supportive of the simplification proposal but makes a number of recommendations, including: (i) introducing a mechanism for all companies to report partial alignment; (ii) clarifying the materiality threshold; (iii) gradually integrating exposures into the Green Asset Ratio; (iv) postponement of KPIs for Banks; and (v) pausing, rather than excluding, reasonable assurance for Corporate Sustainability Reporting Directive (CSRD) reporting, including the EU Taxonomy entity-level reporting. The Platform raises concerns regarding the reduction of the Taxonomy's scope suggested in the Omnibus proposals, as regards certain corporate sustainability reporting and due diligence requirements. The Platform recommends aligning the scope of Taxonomy reporting with the scope of the CSRD, while preserving the CSRD's original scope. For non-SME companies below the 1,000-employee threshold, the Platform suggests that reporting should be focused on the most essential standards, including Taxonomy alignment.Topic : Sustainable Finance -
Omnibus proposals: Council of the EU agrees position on 'stop-the-clock' mechanism
26 March 2025
The Council of the EU has announced that it has agreed its position on the "stop-the-clock" mechanism to postpone the dates of application of certain corporate sustainability reporting and due diligence requirements, as well as the transposition deadline of the due diligence provisions. In particular, to postpone:- by two years the entry into application of the Corporate Sustainability Reporting Directive (CSRD) requirements for large companies that have not yet started reporting, as well as listed SMEs; and
- by one year the transposition deadline and the first phase of the application (covering the largest companies) of the Corporate Sustainability Due Diligence Directive (CSDDD).
Topic : Sustainable Finance -
Council of the EU adopts financial benchmarks regulation
24 March 2025
The Council of the EU has announced that it has adopted at first reading the financial benchmarks regulation with the aim of reducing red tape for EU companies, particularly SMEs. The regulation amends the Benchmark Regulation (Regulation 2016/1011) (BMR) to reduce the regulatory burden on administrators of benchmarks defined as non-significant by removing them from the scope of the legislation. Critical or significant benchmarks will remain within the scope of the revised BMR. EU administrators that are out of scope will be able to opt-in, under certain conditions.
Additionally, the regulation will establish a revised framework for non-EU benchmark administrators to access the EU markets by, among other things, allowing for recognition without requiring equivalence. The European Securities and Markets Authority (ESMA) is granted supervisory powers over non-EU benchmark administrators, aligning ESMA's oversight across both the recognition and endorsement regimes.
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UK FCA voluntary survey of ESG ratings providers
24 March 2025
The Financial Conduct Authority (FCA) has published a new webpage on a voluntary survey it issued to environmental, social and governance (ESG) ratings providers on 21 March, to help inform the future regulation of ESG ratings and broader sustainability disclosures. This follows a survey in November 2024 open to all who may be users of ESG ratings and sustainability disclosures. The FCA explains that the input from this survey will inform its cost benefit analysis, policy development and help ensure that the future regulation is both proportionate and tailored to the needs of the market. The information requested to help the FCA better understand the ESG ratings market, includes: (i) the business models and group structures used to provide ESG ratings; (ii) how ESG ratings are constructed and distributed: (iii) what policies and processes firms have in place; and (iv) how firms interact with the broader sustainability disclosures. The FCA is encouraging firms to respond by 2 May but no later than 16 May.Topic : Sustainable Finance -
EU Platform on Sustainable Finance report: Streamlining sustainable finance for SMEs
21 March 2025
The Platform on Sustainable Finance, an advisory body to the European Commission (EC) established under Article 20 of the Taxonomy Regulation, has published a report on streamlining sustainable finance for SMEs. Despite the critical role that SMEs play in the transition to a net zero, resilient and environmentally sustainable economy, SMEs face significant challenges in accessing external financing for their sustainability efforts. To address the challenges faced by SMEs in relation to use of the Taxonomy, the Platform proposes a tailored streamlined approach – "the SME sustainable finance standard" – to be used by banks and other financiers to classify the loans or other type of financing they provide to SMEs as sustainable (green or transition) finance and simplify any related voluntary reporting.
Read more.Topic : Sustainable Finance -
ESMA publishes overview of planned consultations for 2025
13 March 2025
The European Securities and Markets Authority has published an overview of its planned consultations for 2025. The consultations relate to workstreams under the EU Listing Act, the Markets in Financial Instruments package, the latest European Market Infrastructure Regulation (known as EMIR 3), the review of the Alternative Investment Fund Managers Directive, sustainable finance and investor protection. ESMA states that it will update the list regularly. -
FCA statement on sustainability regulations and UK defence
11 March 2025
The UK Financial Conduct Authority (FCA) has published a statement confirming that there is nothing in its rules, including its sustainability rules, that prevents investment in or finance for defence companies. The FCA confirms that it is up to individual lenders and investors whether they provide capital to defence companies.
The FCA's sustainability-related rules and regulations include: (i) its Sustainability Disclosure Requirements (SDR), including rules on investment labels for asset managers, and an anti-greenwashing rule applicable to all FCA-authorised firms; (ii) disclosure rules for listed issuers, asset managers and asset owners aligned with the Taskforce on Climate-related Financial Disclosures standards; and (iii) its proposed adoption of the International Sustainability Standards Board's standards in the UK. HM Treasury is also consulting on the proposed regulatory regime for ESG ratings providers. None of these rules require financial institutions to treat companies differently because they are in the defence sector.Topic : Sustainable Finance -
ESMA notifies EC of delay of certain deliverables
6 March 2025
The European Securities and Markets Authority (ESMA) has published a letter (dated 3 March) addressed to the European Commission on the prioritisation of ESMA's 2025 deliverables. ESMA's letter sets out specific items which ESMA intends to delay or which have been cancelled. In some instances the delays are made with the purpose of aligning ESMA's work with other initiatives. For example, the technical standards on buy-in under the Central Securities Depository Regulation Review are delayed until T+1 implementation is complete. The EU has committed to moving to T+1 by 11 October 2027. ESMA identifies the following as being included in its highest priority workstreams: (i) implementation of the latest amendments to the European Market Infrastructure Regulation, known as EMIR 3; (ii) the Markets in Financial Instruments Directive and Regulation Review; (iii) the Listing Act; (iv) the Central Securities Depository Regulation Review; (v) the T+1 project; and (vi) the review of the Alternative Investment Fund Managers Directive. ESMA is also prioritising new supervisory responsibilities relating to Consolidated Tape Providers, Green Bond verifiers, ESG Rating providers and oversight powers under the Digital Operational Resilience Act. -
EC guidance on technical screening criteria published
5 March 2025
A Commission Notice was published in the Official Journal of the European Union on the interpretation and implementation of certain legal provisions of the EU Taxonomy Environmental Delegated Act, the EU Taxonomy Climate Delegated Act and the EU Taxonomy Disclosures Delegated Act. These Delegated Acts supplement the EU's Taxonomy Regulation. The Notice facilitates the effective application of these pieces of legislation by providing clarity on the existing provisions of the legislation. The notice provides technical clarifications in response to frequently asked questions (FAQs) on the: (i) technical screening criteria set out in the Taxonomy Climate Delegated Act and the Taxonomy Environmental Delegated Acts; and (ii) disclosure obligations for the non-climate environmental objectives set out in the amendments to the Taxonomy Disclosures Delegated Act. The Notice should be read with previous Commission Notices that have been published on the EU Taxonomy and its Delegated Acts.Topic : Sustainable Finance -
EC proposes omnibus sustainability package
26 February 2025
The European Commission (EC) has published two omnibus proposals on sustainability and EU investments, designed to address overlapping, unnecessary or disproportionate rules that are creating unnecessary burdens for EU businesses. The package includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Adjustment Mechanism (CBAM). In particular, the proposals seek to make sustainability reporting more accessible and efficient, simplify due diligence to support responsible business practices, strengthen the carbon border adjustment mechanism for a fairer trade and unlock opportunities in European investment programmes.
The package is also accompanied by a draft Taxonomy Delegated Act for public consultation. The EC published a Q&A and press release explaining in further detail the purpose of the omnibus legislation and the changes that are proposed.
Read more.Topic : Sustainable Finance -
EC call for evidence on amendments to Delegated Regulation under Taxonomy Regulation
26 February 2025
The European Commission (EC) has published a call for evidence on a draft Commission Delegated Regulation amending Commission Delegated Regulation 2021/2178 in relation to the simplification of the content and presentation of information to be disclosed concerning environmentally sustainable activities. The draft also proposes amendments to Commission Delegated Regulations 2021/2139 and 2023/2486 as regards simplification of certain technical screening criteria for determining whether economic activities cause no significant harm to environmental objectives. The proposals in the Draft Regulation include a 10% de minimis threshold and excluding from the denominator of the key performance indicators (KPIs) exposures of financial institutions to undertakings with an average number of over 1000 employees until the Commission's review of Delegated Regulation 2021/2178 is finalised. The application of the trading book and the fees and commission KPIs is also postponed until 2027. The EC also proposes to simplify templates such as summary KPIs and 'per activity' information to no longer duplicate elements that are covered by general reporting templates. The call for evidence closes on 26 March.
The EC has also published two omnibus proposals on sustainability and EU investments.Topic : Sustainable Finance -
UK FCA portfolio letter on supervision priorities for asset management and alternatives portfolios
26 February 2025
The UK Financial Conduct Authority (FCA) has published a portfolio letter explaining its current supervision priorities for asset management and alternatives. Firms must discuss this letter with their Board, Executive Committee and accountable Senior Managers to consider whether the risks of harm discussed exist in their firm and implement strategies for managing them.
The FCA's supervisory priorities include:- Supporting confident investing in private assets. The FCA will shortly be releasing its multi-firm review on private market valuation practices. The FCA will also start a multi-firm review on conflicts of interest at firms managing private assets.
- Market integrity and avoiding disruption. Informed by the vulnerabilities identified in the System Wide Explanatory Scenario, the FCA will focus surveillance on prudent risk management, liquidity management and operational resilience.
- Consumer outcomes. The FCA will publish its findings from the ongoing multi-firm review of unit linked funds later this year and will also start a multi-firm review of model portfolio services (MPS). This review of MPS will look at how firms are applying the Consumer Duty, to provide confidence that investors are receiving good outcomes from MPS.
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UK Unauthorised Co-ownership Alternative Investment Funds (Reserved Investor Fund) Regulations 2025 published
26 February 2025
The Unauthorised Co-ownership Alternative Investment Funds (Reserved Investor Fund) Regulations 2025 have been published, along with an explanatory memorandum. The regulations support the Government's introduction of the reserved investor fund (RIF) which will be a new type of UK-based investment fund vehicle legally structured as an unauthorised co-ownership alternative investment fund. The regulations will apply, with modifications, sections 261M to 261O and 261P(1) and (2) of the Financial Services and Markets Act 2000, which currently apply to investors in investment funds that are authorised contractual schemes, to investors in UK-based RIFs (or funds that were RIFs). The Regulations were made on 25 February and come into force when the Co-ownership Contractual Schemes (Tax) Regulations 2025 which establish RIFs come into force, that is 19 March. -
FSB letter to G20 finance ministers and central bank governors ahead of meeting
24 February 2025
The Financial Stability Board (FSB) has published a letter (dated 21 February) to the G20 finance ministers and central bank governors ahead of their meeting on 26 and 27 February. The letter addresses areas of focus for the FSB, including:- Implementation monitoring, providing a strategic review of the FSB's monitoring of 15 years of implementation of reforms. The review is intended to provide valuable insights into the effectiveness of the monitoring of post-global financial crisis regulatory reforms and identify areas where improvements can be made in the tools used to ensure consistent, global implementation of agreed reforms. The FSB will publish a progress report in October.
- Completing the G20 roadmap to enhance cross-border payments. The FSB note that as the work has advanced, many structural issues have become apparent that require concerted efforts to resolve. Addressing these issues calls for significant additional work up to and beyond 2027. The FSB will report in October on progress towards the G20's goal of making cross-border payments faster, cheaper, more transparent, and accessible. The FSB's focus this year is on improving the end-user experience, coordinating closely the work of the Bank for International Settlements Committee on Payments and Market Infrastructures and other partner organisations.
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EBA report on data availability and feasibility of a common methodology for ESG exposures
24 February 2025
The European Banking Authority (EBA) has published a report on the data availability and feasibility of a common methodology for ESG exposures. In accordance with the mandate under Article 501c(1) of Regulation 575/2013 (CRR), this report aims to assess the availability and accessibility of data related to environmental, social and governance (ESG) risks, as well as the feasibility of introducing a standardised methodology for identifying and qualifying banking book credit exposures to ESG risks.
The EBA explores institutions' existing practices and identifies the current challenges in standardising the identification and classification of exposures to ESG risks, building on observations related to data quality and collection, assessment methodologies and available regulatory guidance. The overview of current practices is complemented by an analysis of specific elements covered by the mandate, including sustainability disclosure reporting frameworks, supervisory stress testing and ESG scores in the credit risk ratings of external credit assessment institutions.
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ESMA final report on the European Green Bonds Regulation
14 February 2025
The European Securities and Markets Authority (ESMA) has published a final report on the technical standards on the external reviewer regime under the European Green Bonds Regulation (EuGB). The regime requires external reviews of the pre-issuance factsheet and allocation report after full allocation of proceeds, and imposes certain requirements on external reviewers. The final report covers the regulatory technical standards (RTS) in relation to: (i) assessing senior management, board members and others involved in assessment activities; (ii) assessing sound and prudent management and conflicts of interest management; (iii) assessing knowledge and experience of analysts; and (iv) criteria applicable to outsourcing of assessment activities.
Respondents were broadly in support of ESMA's proposals. However, a key architectural change has been made in that the RTS on assessing knowledge and experience of analysts (under article 28(1) of the EuGB Regulation) has been merged into the RTS on assessing senior management, board members and others involved in assessment activities (under article 23(6) of the EuGB Regulation).
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UK FCA expectations for authorised fund applications published
14 February 2025
The UK Financial Conduct Authority (FCA) has published information setting out its expectations for firms applying for collective investment schemes to be authorised as authorised unit trusts, authorised contractual schemes and authorised open-ended investment companies. The information covers specific questions as well as main areas to help applicants understand where they may need to provide further detail. Among other topics, the publication covers the FCA's expectations in relation to environmental, social and governance strategies and sustainability disclosure requirement (SDR) labels, and long-term asset funds which fund managers may find useful. For such funds, the FCA highlights that it expects applications intending to comply with SDR label rules to include the relevant aspects for the specific label as set out in the FCA rules and the FCA's policy statement PS23/16. -
UK FCA delays extending SDR regime to portfolio managers
14 February 2025
The UK Financial Conduct Authority (FCA) has updated its webpage on extending the sustainability disclosure requirements (SDR) and labelling regime to portfolio managers, confirming that it no longer intends to publish a policy statement this year. The FCA had previously stated that, further to consultation paper CP24/8, it would publish a policy statement with final rules in the second half of this year. However, the updated webpage states that the FCA wants to ensure that the extension of the SDR and labelling regime delivers good outcomes for consumers, is practical for firms, and supports growth of the sector and so will continue to reflect on feedback and publish an update in due course. As a reminder, the SDR regime was originally introduced in November 2023, applying a new anti-greenwashing rule to all FCA-authorised firms and a range of disclosure, labelling and naming/marketing requirements to certain UK asset managers.Topic : Sustainable Finance -
EU Platform on Sustainable Finance publishes report on enhancing usability of EU Taxonomy framework
5 February 2025
The EU Platform on Sustainable Finance has published a report on enhancing the usability of the EU's Taxonomy regime. The report takes account of the European Commission's stated ambition to streamline ESG reporting requirements through the proposed Omnibus simplification regulation. The Platform makes four core proposals for simplifying Taxonomy-related reporting.
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European Commission communication on EU competitiveness compass
January 29, 2025
The European Commission has published a communication on a Competitiveness Compass for the EU, which sets out an action plan in response to the Draghi report published in September 2024. The communication sets out the framework for the Commission's work on competitiveness for the next five years and lists its initial priorities. One of the Commission's key aims is to reduce the regulatory burden, which for the financial services sector will include publishing, in February, the first of a series of Simplification Omnibus packages relating to sustainable finance reporting, sustainability due diligence and the sustainable finance taxonomy. Additionally in Q1 2025 the Commission will set a strategy on a Savings and Investments Union, followed by a set of specific proposals, which will aim to promote low-cost saving and investment products at EU level for retail investors. Longer term work includes removing barriers to consolidation of financial markets infrastructure and taxation barriers to cross-border investment, promoting the EU's securitization market, and pursuing the reform and harmonization of insolvency frameworks in the EU. A tentative agenda for forthcoming College of Commissioners' meetings indicates that the Commission will publish a communication on the Savings and Investments Union on March 19, 2025. -
EU Platform on Sustainable Finance makes recommendations on the development and assessment of corporate transition plans
January 23, 2025
The EU Platform on Sustainable Finance has published a report on the development and assessment of corporate transition plans. The PSF identifies core elements for evaluating transition plans and makes recommendations to the European Commission on how best to improve the effectiveness of its policy framework and support the market's provision and access to transition finance. In its report, the PSF states that companies should clearly communicate to financial market participants any gaps and how they will be addressed. Financial market participants should then use credible and robust transition plans to help inform their investment and lending decisions, supporting companies in enhancing their plans over time.
The key recommendations addressed in the report include:- developing sectoral transition pathways for high-emitting sectors at the EU level, including technology roadmaps;
- providing guidance for selecting scenarios that can be used for credible science-based corporate target setting and transition planning;
- creating criteria for qualifying targets as credible and science-based;
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Financial Stability Board publishes work program for 2025
January 23, 2025
The Financial Stability Board has published its work program for 2025. Priority areas of work for 2025 include:- supporting global cooperation on financial stability: the FSB will continue monitoring global financial stability developments and the implications of emerging financial innovation, and conduct in-depth analysis on vulnerabilities in non-bank financial intermediation and climate change;
- enhancing the resilience of NBFI: while preserving its benefits, the FSB workstream includes finalizing policy recommendations on NBFI leverage, developing and beginning implementation of a medium-term workplan to address issues relating to non-bank data availability, use and quality and analyzing the resilience and functioning of the repo market;
- harnessing the benefits of digital innovation while containing its risks: the FSB will produce a thematic peer review on implementation of its crypto-asset recommendations, a report on how financial authorities can monitor AI adoption and assess related vulnerabilities, and finalize the format for incident reporting exchange;
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European Banking Authority publishes draft guidelines on ESG scenario analysis
January 16, 2025
The European Banking Authority has published a consultation paper on its draft guidelines on ESG scenario analysis. For institutions using the internal ratings-based approach for calculating the own funds requirements for credit risk, these guidelines are intended to specify the way in which ESG risks, and in particular, physical and transition risks stemming from climate change, are taken into account in the scenarios used for credit risk internal stress testing. They: (i) specify the different uses institutions should make of scenario analysis and propose a progressive and proportionate approach to incorporating scenario analysis into the institution management system; (ii) provide guidance on what is required before undertaking a scenario analysis and more specifically on the criteria for setting scenarios and identifying the transmission channels for translating climate risks into financial risks; and (iii) specify the distinctive features to be taken into account when conducting a climate stress test in addition to the requirements set out in the guidelines on institutions' stress testing and the use of scenarios to help define and adjust the institution's strategy and test the robustness of its business model to a range of plausible futures. These guidelines complement the EBA guidelines on the management of ESG risks, published earlier this month. The EBA will hold a virtual public hearing on the consultation on March 17, 2025, and the deadline for comments is April 16, 2025. The EBA plans for the guidelines to be finalized by the second half of 2025, and apply from January 11, 2026 to institutions other than small and non-complex institutions and, at the latest, from January 11, 2027 for SNCI. -
Financial Stability Board analytical framework and toolkit to assess climate-related vulnerabilities
January 16, 2025
The Financial Stability Board published a report containing a framework and analytical toolkit to assess climate-related vulnerabilities. The report introduces an analytical framework that the FSB will use to trace how physical and transition climate risks can be transmitted and amplified by the global financial system. The framework builds on the existing FSB Financial Stability Surveillance Framework and focuses on assessing climate-related vulnerabilities holistically, particularly from a cross-border and cross-sectoral point of view. The accompanying toolkit to the framework comprises three categories of metrics to monitor climate-related vulnerabilities from a forward-looking perspective. These are: (i) proxies to provide early signals on potential drivers of transition and physical risks; (ii) exposure metrics to gauge the extent of direct and indirect exposures in the real economy and the financial system; and (iii) risk metrics to quantify the impacts for financial institutions and the system as a whole. The FSB notes that while these metrics are already used by some FSB members domestically, various methodological and data challenges need to be overcome for them to be used for global monitoring. The FSB notes that the framework and toolkit are live documents, to be refined as understanding evolves on how climate-related vulnerabilities affect financial stability and as methodological and data issues are resolved. As such, the FSB will continue to develop the framework by operationalizing the toolkit and conducting in-depth analyses of specific climate vulnerabilities that may have global financial stability implications. -
European Banking Authority finalizes guidelines on management of ESG risks
January 9, 2025
The European Banking Authority has published its final guidelines on the management of ESG risks. The guidelines set out requirements for institutions for the identification, measurement, management, and monitoring of ESG risks, including through plans aimed at ensuring their resilience in the short, medium, and long term. The guidelines will apply from January 11, 2026, except for small and non-complex institutions for which the guidelines will apply at the latest from January 11, 2027.
The guidelines specify requirements regarding the internal processes and ESG risk management arrangements that institutions should have in place in accordance with the CRD VI. They also specify the content of plans to be prepared by institutions with a view to monitoring and addressing the financial risks stemming from ESG factors, including those arising from the adjustment process towards the objective of achieving climate neutrality in the EU by 2050. The EBA explains that these plans will support the preparedness of institutions for the transition and should be consistent with transition plans prepared or disclosed by institutions under other pieces of EU legislation.Topic : Sustainable Finance -
EU platform on sustainable finance draft report and call for feedback on activities and technical screening criteria to be updated or included in EU Taxonomy
January 8, 2025
The EU Platform on Sustainable Finance has published a draft report on activities and technical screening criteria to be updated or included in the EU taxonomy, with a related call for feedback. The draft report, prepared by the Platform on Sustainable Finance's technical working group, is a deliverable required under the EU Taxonomy Regulation. Responses to the call for feedback may be submitted until February 5, 2025.
The draft report contains preliminary recommendations relating to: (i) the review of the criteria and analysis for the EU Taxonomy Climate Delegated Act; (ii) new activities mandated by the European Commission; (iii) new activities mandated by the European Commission but not completed; and (iv) further recommendations for climate change adaptation.
The Platform on Sustainable Finance explains that the aim is to gather feedback and evidence from a wider set of stakeholders to improve the draft criteria and make them more robust and usable. However, the Platform on Sustainable Finance emphasizes that the call for feedback is not an official Commission consultation.Topic : Sustainable Finance -
EU technical advice on amendments to credit rating agency regulatory framework concerning ESG factors in credit rating methodologies
December 18, 2024
The European Securities and Markets Authority has published technical advice on revisions to Delegated Regulation (EU) 447/2012 and Annex I of the CRA Regulation. The proposed amendments are intended to ensure the better traceability on the incorporation of ESG factors in credit rating methodologies and better disclosure of the relevance of ESG factors to individual credit rating actions. The proposals address the need to update several provisions of Delegated Regulation (EU) No 447/2012 to reflect ESMA's supervisory observations. The technical advice includes ESMA's final proposals following the conclusion of the consultation conducted by ESMA and explains how this feedback has been considered in developing the final technical advice. In addition, Annex III provides ESMA's proposed amendments to Delegated Regulation (EU) No 447/2012 and Annex I of the CRA Regulation. -
EU Platform on Sustainable Finance report on categorization of products under Sustainable Finance Disclosure Regulation
December 17, 2024
The EU Platform on Sustainable Finance has published a report on the categorization of products under the Sustainable Finance Disclosure Regulation. The Platform recommends categorizing products with the following sustainability strategies:- sustainable — contributions through Taxonomy-aligned Investments or Sustainable Investments with no significant harmful activities, or assets based on a more concise definition consistent with the EU Taxonomy;
- transition — investments or portfolios supporting the transition to net zero and a sustainable economy, avoiding carbon lock-ins, in line with the European Commission's recommendations on facilitating finance for the transition to a sustainable economy; and
- ESG collection — excluding significantly harmful investments/activities, investing in assets with better environmental and/or social criteria or applying various sustainability features. All other products should be identified as unclassified products.
The Platform recommends evaluating whether the scope of the categorization should go beyond the current SFDR, potentially categorizing all products and services under sustainability preferences in the Insurance Distribution Directive and the Markets in Financial Instruments Directive. The Platform also recommends that the European Commission develops a common understanding on impact investing in the EU sustainable finance framework and how it relates to the EU Taxonomy and thereafter determines how to integrate it in the categorization scheme. -
UK Financial Markets Standards Board transparency draft statement of good practice on the governance of sustainability-linked products
December 17, 2024
The Financial Markets Standards Board has published a consultation on its transparency draft of its statement of good practice on the governance of sustainability-linked products. SLPs are products whose financial and/or structural characteristics can vary depending on whether the user (i.e., borrower or issuer of, or counterparty to, SLPs) achieves specific sustainability or ESG objectives. They can be used for general corporate purposes, which allows many users (e.g., borrowers, issuers, or counterparties to sustainability-linked products) to access the sustainable finance market in a more flexible way. The FMSB's statement is intended to codify good practice for the governance of SLPs and support consistent approaches across asset classes and jurisdictions. It is hoped this will enhance the quality and integrity of SLPs; boost market confidence; help mitigate greenwashing risk; and support the development of a deeper, more robust sustainability-linked product market. The statement of good practice is intended to apply to service providers (e.g., firms acting as sustainability-linked loan lenders, bookrunners, or lead arrangers on a sustainability-linked bond issuance or counterparties to a sustainability-linked derivative) or users of SLPs in wholesale financial markets and to support, and be read in conjunction with, existing asset-class specific guidance (notably ICMA, LMA, and ISDA principles). The deadline for comments is February 21, 2025.