On 30 October 2020, the European Commission published a letter from it to the chairs of the European Supervisory Authorities. The letter was with regard to the application of Regulation (EU) 2019/2088 on the sustainability related disclosures in the financial services sector and related technical standards.
Key points in the letter include:
- The co-legislators agreed in March 2019 on an ambitious timeframe for the Regulation, requiring the joint development by EIOPA, ESMA and EBA of most of the draft regulatory technical standards (RTS) by 30 December 2020 and the application of the Regulation’s provisions from 10 March 2021.
- The unprecedented economic and market stress caused by the COVID-19 pandemic has necessitated an extension of the deadline for the public consultation on the draft RTS.
- The application of the Regulation is not conditional on the formal adoption and entry into force or application of the RTS as it lays down at Level 1 general principles of sustainability-related disclosures in three distinct areas.
- Financial market participants must, in accordance with the applicable sectoral legislation, already consider sustainability risks in their internal processes. Product manufacturers that produce financial products that qualify under Articles 8 and 9 of the Regulation must describe in the product documentation how the levels of sustainability are achieved. In relation to transparency of adverse sustainability impacts, numerous financial market participants currently comply with the non-financial reporting requirements under Directive 2013/34/EU or adhere to international standards and might consider using that information.
- Even without the full RTS, there are no impediments to financial market participants and financial advisers complying with the Level 1 requirements laid down in the Regulation.
- All application dates are being maintained as laid down by the Regulation with effect from 2021 so financial market participants and financial advisers subject to the Regulation will need to comply with its high level and principle based requirements from that time.
- To provide financial market participants and financial advisers adequate time for implementation, the RTS will become applicable at a later stage.