Sustainable Finance

23. September 2020

In 2018 the EU Commission published the “Action Plan on Sustainable Finance”. Since then, everyone has been talking about Sustainable Finance or ESG.

ESG is an English acronym, stands for "Environment, Social and Governance" and as an umbrella term means the consideration of sustainability goals in capital investments: in ecological terms, in social terms and with regard to (good) corporate governance. For example, "E" generally stands for the conservation of resources, environmentally friendly production, reduction of greenhouse gases, eco-efficiency with regard to energy, water, carbon dioxide and waste, energy management, investment in renewable energies etc., "S" for example for the observance of central labor rights, fair conditions at the workplace, occupational health and safety (also with suppliers), equal opportunities and diversity, prevention of exploitation and discrimination, freedom of assembly and trade unions etc., and "G" stands exemplarily for transparency in corporate governance and external communication, for the anchoring of sustainability management at the executive and supervisory board level and ESG risk management, the prevention of corruption, bribery and money laundering, for regulatory compliance and the avoidance of conflicts of interest.

With the "Action Plan on Sustainable Finance" the EU Commission has launched an extremely voluminous legislative initiative. The Action Plan comprises ten (legislative) measures which are intended to contribute to the achievement of three objectives, as visualized in the graph below:

  • The re-orientation of private capital flows towards sustainable investments (measures 1-5; dark blue)
  • The fostering of transparency and long-termism in markets (measures 6-8; dark grey)
  • The embedding of sustainability risk into risk management (measures 9-10, red).

The Action Plan includes a wide range of initiatives such as

  • The taxonomy regulation to create a uniform classification system for sustainable activities
  • The Sustainable Finance Reporting Regulation (SFDR), the so-called Disclosure Regulation, to create consistent disclosure requirements with regard to sustainability
  • A CO2 benchmark regulation to provide standardized sustainability benchmarks
  • New secondary legislation or "delegated acts" to integrate sustainability risks and factors into the UCITS Directives and the AIFMD framework, i.e. for the entire fund industry
  • New delegated acts to integrate sustainability risks and factors into the MiFID II and IDD frameworks (including the integration of sustainability considerations into financial advice)
  • The development of a standard for Green Bonds
  • The development of an EU eco-label for financial products (EU Ecolabel)
  • Updating the non-financial reporting of companies as part of a review of the Non-Financial Reporting Directive (NFRD).

Of the entire legislative package of the Sustainable Finance Initiative, measures #1 (Taxonomy Regulation), #2 (standards and labels for environmentally friendly financial products/green financial products), #4 (incorporating sustainability as part of financial advice), #6 (developing sustainability benchmarks and better integrating sustainability into ratings), #7 strengthening the disclosure made by asset managers and financial advisors to their clients, including the Disclosure Regulation) and #9 (strengthening the rules on disclosure of sustainability information and accounting) are the most relevant and important legislative acts for funds and their management companies.

Legal basis

Taxonomy (Regulation (EU) 2020/852)

TEG Report on Taxonomy

Technical annex to the final report of the Taxonomy

EU Commission’s website on the Taxonomy

FAQ of the EU Commission on the Taxonomy and the EU Green Bond Standard

Disclosure Regulation (Regulation (EU) 2019/2088)

Disclosure Regulation as amended (consolidated version)

ESAs' consultation paper on the RTS on the disclosure regulation

Draft Delegated Regulation amending Delegated Regulation 2017/565/EU (MiFID II)

Draft Delegated Directive amending Delegated Regulation 2017/593/EU (MiFID II)

Draft Delegated Directive amending Directive 2010/43/EU (so-called UCITS Implementing Directive)

Draft Delegated Regulation amending Delegated Regulation (EU) No 231/2013 (AIFMD Level II Regulation)

Draft Delegated Regulation amending the Delegated Regulations on the Insurance Distribution Directive IDD (EU) No 2017/2358 (as regards the prudential and regulatory requirements for insurance undertakings and insurance distributors) and 2017/2359 (as regards information requirements and conduct of business rules applicable to the distribution of insurance investment products)

Draft Delegated Regulation amending the Delegated Regulation on Solvency II (Solvency Level II Regulation (EU) 2015/35)

Regulation (EU) No 2019/2089 amending the Benchmark Regulation (EU) No 2016/1011

Three Delegated Regulations to complement the Benchmark Regulation

Information on the EU Green Bond Standard

Review of the Non-Financial Reporting Directive (NFRD)

ESMA Final Report on undue short-term pressure on corporations

BaFin’s Guidance Notice on Dealing with Sustainability Risks

BAI feedback statements

BAI opinion on BaFin’s Consultation on the Guidance Notice on Dealing with Sustainability Risks
23. April 2020

 

BAI opinion on the Consultation Paper of the ESAs on the Level II measures for the Disclosure Regulation
3. November 2019

 

Documents/contributions

Hier geht es zu den Unterlagen und Aufzeichnungen der folgenden Webinaren:

  • "ESG-Management: Aktuelle Herausforderungen in der Praxis und Vorteile einer digitalen Umsetzung“ am 28. Mai 2020
  • "A practical guide to improving your ESG management" am 23. März 2020
  • "Impact Management und Messung im Bereich Real Assets" am 6. Februar 2020
  • "Responsible investments: how to select, implement and monitor Social and Governance aspects in the investment process" am 3. Februar 2020

Hier geht es zum Workshop zu ESG/Sustainable Finance am 26. September 2019

ESG im Asset Management –wie nachhaltiges Investieren Branche und Portfolio verändert
BAI-Vortragsfolien im Rahmen der Investmentsfondstage 2018

Hier geht es zur Agenda der BAI Insight 57 „ESG hands-on“: 360°-View für ESG-Investments bei institutionellen Investoren" am 20./27. Januar 2020

Bei Interessen an den Workshop- bzw. Insight-Unterlagen kontaktieren Sie bitte Roland Brooks (brooks@bvai.de).

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