CMS Luxembourg’s Post

[📢 #Newsflash] - SFDR/ESG: The CSSF’s supervisory priorities in the area of sustainable finance🌱 On 22 March 2024, the Commission de Surveillance du Secteur Financier (CSSF) published a communiqué outlining its supervisory priorities in sustainable finance. This CSSF communiqué emphasises that while it provides a general overview of the matters to be addressed in the area of sustainable finance, it is not exhaustive due to the evolving nature of the regulatory framework. The CSSF has laid out its priorities across various sectors, including credit institutions, the asset management industry, investment firms, and issuers. The focus here is on the latter three. 👉Read more: https://lnkd.in/eYP5JPKS 📧 For more information, contact our team of experts: Augustin de Longeaux, Alexandre Tangton, Naomi Makita #ESG #SustainableFinance #SFDR #Update

The financial sector asks EC to delay SFDR technical changes by supervisors until broader review of SFDR is complete. ⏳On December 4th, when the three European Supervisory Authorities (#ESAs) published their Final Report amending the draft Regulatory Technical Standards (#RTS) regarding the Sustainable Finance Disclosure Regulation (#SFDR), following statement was made: 👉🏻These draft RTS would be applied independently of the comprehensive assessment of SFDR announced by the European Commission in September 2023 (with deadline 15 December 2023) and before changes resulting from that assessment would be introduced. 🤐 If you look at the (potential) changes included in the draft RTS (changes to PAI, GHG, machine-readable format, changes to templates) and at all potential options included in the targeted consultation for the broader SFDR review, significant changes can be expected. Moreover, these changes would come in two waves 🌊🌊 , increasing the efforts for investors and the financial sector to adapt to the rules in the broadest sense. 💡To mitigate adverse effects (#PAI🙃) and prevent significant damage (#DNSH😉) to the noble initiative, it is more than highly recommended to come with one well-thought-out update, which will be similarly enforced by all EU regulators.

Key messages of our response to the European Commission's consultation on the implementation of the Sustainable Finance Disclosure Regulation #SFDR are: 📌Rationalize disclosure requirements and simplify the documentation for pre-contractual and periodic reporting to make it more understandable and user-friendly. 📌Ensure interoperability with the frameworks of other jurisdictions, to facilitate cross-border distribution of funds and maximize international capital flows directed at financing the transition. 📌Address inconsistencies between SFDR and other pieces of the EU sustainable finance legislation, in particular CSRD, MiFID II sustainability preferences and PRIIPS. 📌Create a categorization system building on intentionality and incorporating the concept of transition finance. Check out our full response (including a table comparing the different international initiatives) here: https://lnkd.in/eGKb2T_h #EUSustainableFinance #SwissFinanceCouncil

Exciting Development in Sustainable Finance: The Launch of ESMA's Consultation Paper on European Green Bond Regulation 🔗https://lnkd.in/dER5dEZU #GreenBonds #SustainableFinance #ESMA #EuropeanGreenBondRegulation #Consulting

📢 Eurosif submitted its response to the European Commission consultation on the implementation of the Sustainable Finance Disclosure Regulation (#SFDR).   📌 This consultation forms part of a comprehensive assessment of the regulation undertaken by the European Commission and will feed into a potential review of the framework expected at the start of the next European mandate.   👉 Eurosif welcomes this consultation and highlights the important progresses enabled by the SFDR, which has improved transparency on the integration of sustainability risks and consideration of adverse sustainability impacts in investment decisions and financial advice.   ⚠️ However, the current framework is insufficiently clear on the definition of some key concepts and is used as a de facto classification regime. This leaves room for interpretation, which leads to fragmented implementation and raises investor protection concerns. 👉 The SFDR framework needs to be reviewed to build on its achievements and ensure it is fit for purpose to further deliver on its objectives. This should include, inter alia: ➡ Requiring mandatory disclosure requirements for all financial products, including how sustainability risks are integrated in the investment process and the consideration of a set of Principal Adverse Impacts (PAI) indicators. ➡ Building on the foundations of the current SFDR framework to establish three formal product categories based on the products’ demonstration of sustainability objectives: “sustainable investments”, “transition investments”, and “binding environmental and/or social factors”. These categories should be underpinned by a set of minimum criteria and specific disclosure requirements. ➡ Preventing products that do not fall within these categories from making sustainability, transition or ESG-related claims. This should be consistent across product-level documentation, websites, and marketing communications. ➡ Ensuring that potential modifications to the SFDR framework should be consistently reflected across other EU sustainable finance regulations, including in the MiFID2/IDD sustainability preferences advisory process and PRIIPs Key Information Document.   🔗 Read Eurosif’s key messages and full response here: https://lnkd.in/eRFu2g5m

Monitoring, with certain excitement, the current public consultation issued by the European Commission as regards the implementation of the Sustainable Finance Disclosures Regulation (SFDR). The European Commission announced already in December 2022 that the framework should be comprehensively evaluated, and the current public consultation was launched on 14 September 2023. By closing on 15 December 2023, the consultation aims at having collected views from a wide array of stakeholders about their experiences with the SFDR. The general consultation covers, inter alia, the interaction with other parts of the European frameworks for sustainable finance (which indeed is an interesting topic in light of the upcoming requirements of the CSRD) whereas the targeted consultation aims to explore possible options to improve the framework and to address any potential shortcomings. It is a great opportunity for financial market participants to make their voices heard.

💡The Sustainable Finance Disclosure Regulation (SFDR) is still very young.   Yet, the consultation on its review leads to debates on various innovative ideas for new regulatory changes.   In this context, the AMF suggests getting the basics rights and considers the definition of objective minimum criteria as a priority. https://lnkd.in/eXTCziU3

A move like this, if it were to make it into the adopted Directive, would certainly convince even the most distrustful about the double standards applied in the case of the financial sector. But even more than that, the credibility of the EU Green Deal, the principle of "just transition" and the associated sustainable finance framework would take a serious hit. Is the European approach more ambitious than this, or is it just the same? #esg #sustainablefinance #sustainabledevelopment #csddd

Exciting Development in Sustainable Finance: The Launch of ESMA's Consultation Paper on European Green Bond Regulation 🔗https://lnkd.in/dER5dEZU #GreenBonds #SustainableFinance #ESMA #EuropeanGreenBondRegulation

#CFOs get ready, we now have a Sustainable Finance Roadmap from Treasury. This is a big deal (and long anticipated). The Strategy outlines the anticipated investments and reforms required to support a sustainable finance sector, with a neat diagram detailing the implementation of the strategy. The strategy follows a “climate-first, not only” approach to sustainable finance, due to the systemic nature of climate-related opportunities and risks, with plans to expand to other sustainability-related issues and frameworks over time. The initial focus is (of course) on the establishment of mandatory disclosure of climate-related financial risks and opportunities. Australia released draft legislation earlier this year which would introduce climate-related reporting requirements for large and medium sized companies, including disclosures on climate-related risks and opportunities, and on greenhouse gas emissions across the value chain. The Australian Accounting Standards Board (AASB) is expected to finalise the climate reporting standards in August 2024, the Australian Auditing and Assurance Board (AUASB) is developing assurance standards for climate disclosures in late 2024, and reporting requirements for the first set of companies to be covered by the new rules will commence on January 1, 2025. Treasury also aims to develop and publish best practice guidance for the disclosure of corporate transition plans by the end of 2025. The strategy also includes plans for the development of a Sustainable Finance Taxonomy, providing a set of criteria that can be used to evaluate the alignment or contribution of economic activities to climate and other sustainability objectives. According to the roadmap, the Australian Sustainable Finance Institute (ASFI) will finalize the development of the initial taxonomy by the end of 2024. Aligned with the ‘climate-first’ strategy, 𝐭𝐡𝐞 𝐢𝐧𝐢𝐭𝐢𝐚𝐥 𝐭𝐚𝐱𝐨𝐧𝐨𝐦𝐲 𝐰𝐢𝐥𝐥 𝐜𝐨𝐯𝐞𝐫 “𝐠𝐫𝐞𝐞𝐧” 𝐚𝐧𝐝 “𝐭𝐫𝐚𝐧𝐬𝐢𝐭𝐢𝐨𝐧” 𝐚𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬 𝐭𝐡𝐚𝐭 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐞 𝐭𝐨 𝐜𝐥𝐢𝐦𝐚𝐭𝐞 𝐜𝐡𝐚𝐧𝐠𝐞 𝐦𝐢𝐭𝐢𝐠𝐚𝐭𝐢𝐨𝐧, 𝐚𝐧𝐝 𝐰𝐢𝐥𝐥 𝐟𝐨𝐜𝐮𝐬 𝐨𝐧 𝐬𝐢𝐱 𝐤𝐞𝐲 𝐬𝐞𝐜𝐭𝐨𝐫𝐬, 𝐢𝐧𝐜𝐥𝐮𝐝𝐢𝐧𝐠 𝐞𝐥𝐞𝐜𝐭𝐫𝐢𝐜𝐢𝐭𝐲 𝐚𝐧𝐝 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐲, 𝐛𝐮𝐢𝐥𝐭 𝐞𝐧𝐯𝐢𝐫𝐨𝐧𝐦𝐞𝐧𝐭, 𝐭𝐫𝐚𝐧𝐬𝐩𝐨𝐫𝐭, 𝐫𝐞𝐬𝐨𝐮𝐫𝐜𝐞𝐬, 𝐚𝐠𝐫𝐢𝐜𝐮𝐥𝐭𝐮𝐫𝐞, 𝐚𝐧𝐝 𝐥𝐚𝐧𝐝. The government will also implement a labelling and disclosure requirement for investment products marketed as ‘sustainable’ or similar, including for managed funds and within the superannuation system - aimed at reducing #greenwashing in investment products. Here's a link to the roadmap: https://lnkd.in/gV3Q2j-2 #roadmap #Treasury #sustainability #financialrisk #financesector #sustainablefinance