Sustainability in Distribution
Sustainability in Distribution
MiFID II and IDD – consideration of sustainability preferences
Investors increasing want to ensure that they money is not only invested profitably, but also responsibly – such as considering ecological and social criteria as well as good governance (ESG criteria).
What does sustainability in distribution mean?
Since 02 August 2022, when providing investment advice and insurance mediation, banks, investment firms as well as insurance undertakings have been required as part of insurance distribution to check their clients’ sustainability preferences. The objective is to consider sustainable products appropriately during advisory consultations, and to contribute to the transformation of the economy towards greater sustainability.
What must be observed?
Institutions providing advice must adapt their processes to:
- consider sustainability factors within the scope of product governance,
- explicitly consider sustainability risks,
- ask clients about their sustainability preferences,
- identify appropriate financial instruments or insurance-based investment products that have the corresponding sustainability features,
- justify and document recommendations in line with their sustainability preferences.
Legal bases and interpretative materials
Commission Delegated Regulation (EU) 2021/1253 (Format: pdf, Size: 412,2 KB, Language: English) of 21 April 2021 amending Delegated Regulation (EU) 2017/565 as regards the integration of sustainability factors, risks and preferences into certain organisational requirements and operating conditions for investment firms
Commission Delegated Directive (EU) 2021/1269 (Format: pdf, Size: 385,7 KB, Language: English) of 21 April 2021 amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations
Commission Delegated Regulation (EU) 2021/1257 (Format: pdf, Size: 429,7 KB, Language: English) of 21 April 2021 amending Delegated Regulations (EU) 2017/2358 and (EU) 2017/2359 as regards the integration of sustainability factors, risks and preferences into the product oversight and governance requirements for insurance undertakings and insurance distributors and into the rules on conduct of business and investment advice for insurance-based investment products