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MFA Submits Letter to ESMA on Consultation Papers on Integrating Sustainability Risks

On February 19, MFA submitted a letter to the European Securities and Markets Authority (ESMA) in response to both of ESMA’s consultation papers on integrating sustainability risks and factors in: (1) the UCITS Directive and AIFMD, and (2) MiFID II.  In the letter, MFA expresses:

  1. General support for increasing transparency with respect to sustainability risks and sustainable investment opportunities, and for ESMA’s use of a high-level principles-based approach to integrating the risks into the EU frameworks;
  2. Concern with ESMA including broad wording in the proposed amendments that would require all investment managers to take into account “sustainability risks and factors” or “ESG preferences” as part of their requirements, and instead recommend that ESMA require a firm to take into account a client’s ESG preferences “where relevant”; and
  3. Support for the European Commission’s approach to ESG disclosure under proposed amendments to MiFID II, which would not require firms to: (1) incorporate ESG considerations into the information they provide to clients or potential clients on investment services, or (2) disclose details of the types of financial instrument that may be included in the client portfolio based on the client’s ESG preferences.