ESG in the banking and insurance sectors – Update on sustainability-related disclosures

On 25 July 2022, Commission Delegated Regulation (EU) 2022/1288 of 6 April 2022 (“CR 2022/1288”) was published in the Official Journal of the European Union.

CR 2022/1288 supplements Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 (“SFDR”) with regard to regulatory technical standards (“RTS”) providing guidance on the sustainability-related disclosures imposed on financial market participants and financial advisers.

I. Which banking and insurance sector actors are concerned?

CR 2022/1288 applies to banking and insurance sector actors subject to SFDR:

• banks and investment firms that provide investment advice or portfolio management to professional and retail clients, and
• insurance undertakings and intermediaries that distribute or advise on insurance-based investment products

(together, “Concerned Entities”).

II. Background

In recent years, the European supervisory authorities (“ESAs”) have developed detailed RTS to ensure the comprehensiveness, clarity and reliability of the sustainability-related disclosures required under the SFDR.

On 6 April 2022, the European Commission published the RTS prepared by the ESAs.

Following a review and general validation of these RTS by the European Parliament and the Council, CR 2022/1288 was published in the Official Journal of the European Union on 25 July 2022.

III. Objective

CR 2022/1288 specifies the content, methodology and presentation of the information that Concerned Entities must disclose in pre-contractual documentation, on websites and in periodic reports in relation to:

• the principle of “do no significant harm”,
• sustainability indicators and adverse sustainability impacts, and
• the promotion of environmental or social characteristics and sustainable investment objectives.

To increase the comparability of sustainability-related disclosures, the RTS include standardised templates that Concerned Entities must use.

The relevant disclosures are designed to better inform investors about sustainable investments and to help integrate sustainability preferences into the suitability assessment required under MiFID II and the IDD.

IV. Next steps

After several delays, the date of application of CR 2022/1288 has now been set for 1 January 2023.

Concerned Entities must therefore get ready to adapt their pre-contractual documentation, websites and periodic reports in accordance with the RTS.

Although CR 2022/1288 has now been published, the RTS may nevertheless continue to evolve in the coming months.

On 8 and 11 April 2022, the EU Commission invited the ESAs to propose amendments to the RTS, including with respect to (i) financial products’ exposures to investments in gas and nuclear activities and (ii) principal adverse impact indicators.

Stay tuned, and contact our experts for further assistance!

• Read CR 2022/1288 here_
• Read our newsflash on the Commission’s publication of final RTS for the investment fund sector here_