Qi Qi Dong January 27, 2022
The European Securities and Markets Authority (ESMA) is currently reviewing the MiFID II suitability guidelines to incorporate sustainability considerations into investment advice and portfolio management. This initiative aims to align financial services with the European Green Deal’s objectives.
Key Proposed Amendments:
- Client Sustainability Preferences: Investment firms will be required to gather detailed information on clients’ sustainability preferences, ensuring that investment recommendations align with individual environmental, social, and governance (ESG) criteria.
- Assessment Process: Firms must integrate sustainability factors into their suitability assessments, ensuring that investment products meet both financial objectives and clients’ ESG preferences.
- Organisational Requirements: Firms are expected to provide staff with appropriate training on sustainability topics and maintain accurate records of clients’ sustainability preferences and any updates to these preferences.
ESMA’s consultation period concluded on April 27, 2022, with the final report and updated guidelines anticipated in the third quarter of 2022. These developments underscore ESMA’s commitment to enhancing investor protection and promoting sustainable finance within the EU.
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