SRI Services response to ESMA Consultation Paper ‘On Integrating sustainability risks and factors into MIFID II’

SRI Services was delighted to have had the opportunity to respond to the ESMA Consultation Paper ‘On Integrating sustainability risks and factors into MIFID II’ earlier this week (even though it did seem a bit strange doing so given Brexit…)

In brief, the paper (European Securities and Markets Authority – ESMA35-43-1210)  proposes ESG/Sustainability related fact finding and the setting up of the necessary support mechanisms that will enable (require) this area to be brought into the advice process  (ie general organisational requirements, revised suitability guidelines,  support systems, product labelling, risk assessment, governance, compliance etc) .

Some background:

The consultation follows on from the EU Climate Action Plan and the work of the HLEG (High Level Expert Group) that a number of highly regarded UK investment organisations were involved in drafting – as well as previous consultation that I (and other SRI specialists) have previously responded to.

It also follows on from work that a number of us in this area were involved in as part of an UKSIF project in the early 2000’s  – when this area was discussed with the (then) FSA…

Some context:

Those who know me will be aware that I wholly support this change.

This is in part because I believe considering this area is part of giving the best possible service to clients (many of whom are interested in these issues), partly because it can help protect clients from investment risks and gives them exposure to often hidden investment opportunities – and also because I believe we need all investors ‘on board’ if we are to address sustainability related challenges – particularly climate change.

Below are links to two versions of our response.

• Read our full consultation response here (as submitted)
• Read a version of our response with key ‘retail intermediary / adviser market’ text highlighted in yellow.
• Consultation paper link here.  

Note:

As the deadline for this paper was shortly after the FCA climate change consultation deadline so was not able to spend as much time on this as I would have liked – but nonetheless I hope the key points are covered in the response we submitted.