European trade group warns on implementation timing

More time is needed to update sustainable investment policies, says EFAMA


Joe McGrath

The European Fund and Asset Management Association (EFAMA) has urged the bloc’s financial regulator to allow more time to implement wide-ranging updates to its sustainable investment policies.

In a statement today, EFAMA outlined its response to a consultation by the European Securities and Markets Association (ESMA) on integrating sustainability risks and factors into three of its major directives – and cautioned a year would not be long enough to do it.

The statement addressed the directives applying to Undertakings for Collective Investments in Transferable Securities (UCITS), Alternative Investment Fund Managers (AIFMD) and Markets in Financial Instruments (MIFID), which was updated at the start of 2018.

Any changes to these directives would have to be made by national governments within the EU before being able to come into effect, which may take longer than 12 months, EFAMA said.

Generally, however, the funds body welcomed ESMA’s uniform stance that acknowledges the principle of necessary proportionality based on a firm’s investment strategy and underlying assets of each investment product.

Tanguy van de Werve, EFAMA’s director general, said: “ESMA’s high-level approach is a positive one as it ensures the level of flexibility required in view of the rapid market and regulatory developments in the area of sustainable finance.”

EFAMA also advised ESMA that in this case, the term “sustainability” should only apply to risks to an investment and its performance, rather than to society and environment at large, as it could have considerable impact.

“With this in mind, we call [on] ESMA to ensure that the notion of sustainability risk is to be linked to the financially material impact on an investment and that a consistent application among the different ongoing consultation and legislative process is in place,” said van de Werve.

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