European Supervisory Authorities’ Joint Opinion on the Sustainable Finance Disclosure Regulation

03.07.2024 Orhan Emin Erdem
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On June 18, 2024, the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority (European Supervisory Authorities) published a joint opinion (Opinion) on the assessment of the Sustainable Finance Disclosure Regulation (Regulation) numbered 2019/2088 and dated November 27, 2019.

By assessing the Regulation, the European Supervisory Authorities aim to establish a sustainable finance framework that takes into account both green transformation and consumer protection.

In order to simplify the categories of financial products, the European Supervisory Authorities propose two voluntary categories, namely “sustainable” and “transition”. These categories aim to prevent green washing and ensure that financial market participants comprehend the purpose of their products for their consumers.

The European Supervisory Authorities propose to the European Commission to use a sustainability indicator to grade financial products such as investment funds, life insurance and pension products.

The Opinion also covers the following areas:

  • Improvements to the definition of sustainable investments,
  • Simplifications needed in the disclosures to investors,
  • Assessments of products outside the two mentioned categories,
  • Products that should be covered by the Regulation,
  • Explanations on how to improve the negative effect of investments on people and the environment,
  • The need for consumer testing before introducing policy proposals to evaluate the Regulation.

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