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ESMA consults on measures to promote sustainability in EU capital markets

19 December 2018

The European Securities and Markets Authority (ESMA) has today launched three public consultations on sustainable finance initiatives to support the European Commission’s (EC) Sustainability Action Plan in the areas of securities trading, investment funds and credit rating agencies (CRAs).

The first two consultations seek stakeholders’ input on draft technical advice for the integration of sustainability risks and factors into the Markets in Financial Instruments Directive II (MiFID II) (securities trading) and the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings in Collective Investment in Transferable Securities (UCITS) Directive (investment funds). While the third consults on CRA guidelines aimed at improving the quality and consistency of disclosures of environmental, social and governance (ESG) factors when considered as part of a credit rating action.

The consultations focus on environmental, social and good governance considerations with regards to investment firms, investment funds and CRAs. The draft advice and proposed guidelines touch upon organisational requirements, operating conditions, risk management, conflicts of interest, product governance and disclosure requirements.

In order to ensure consistency, ESMA’s draft advice was developed in cooperation with the European Insurance and Occupational Pensions Authority (EIOPA), which has received a similar mandate regarding Solvency II and the Insurance Distribution Directive (IDD).

Next steps

The EC requested ESMA to provide technical advice on the integration of sustainability risks and factors in the UCITS Directive, AIFMD and MiFID II by 30 April 2019. ESMA, along with the consultations, will hold an open hearing on 4 February 2019 and will use the consultation feedback to finalise its draft advice to the EC. 

The Consultation Paper on credit ratings has a three-month consultation period with a view to publishing the final report before the end of July 2019.

Please provide your responses to each of the consulation paper(s) you wish to provide input on:

  1. Consultation on integrating sustainability risks and factors in MiFID II
  2. Consultation on integrating sustainability risks and factors in the UCITS Directive and AIFMD
  3. Consulation on Disclosure Requirements Applicable to Credit Ratings