Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda
Abstract
:1. Introduction
2. The EU Action Plan for Sustainable Finance
3. Integrating Sustainability in EU Investor Protection Regulation
4. Defining Sustainability
5. EU Taxonomy
6. Disclosure of Product Information
7. Conduct of Business Rules
7.1. Suitability Assessment
7.2. Conflict of Interests
7.3. Product Governance and Intervention
8. Financial Education
9. Conclusions
Author Contributions
Funding
Conflicts of Interest
References
- World Commission on Environment and Development (WCED). Our Common Future; Oxford University Press: Oxford, UK, 1987. [Google Scholar]
- UN General Assembly. United Nations Millennium Declaration, Resolution 55/2 adopted by the General Assembly. (18 September 2000).
- UN General Assembly. Transforming our world: the 2030 Agenda for Sustainable Development, Resolution 70/1 adopted by the General Assembly (21 October 2015).
- UN. Paris Agreement on Climate Change. Framework Convention on Climate Change (12 December 2015).
- UN Resolution. Addis Ababa Action Agenda of the Third International Conference on Financing for Development (Addis Ababa Action Agenda), Resolution 69/313 adopted by the General Assembly (17 August 2015).
- UNDRR. Sendai Framework for Disaster Risk Reduction 2015–2030. March 2015. Available online: https://www.unisdr.org/we/coordinate/sendai-framework (accessed on 28 September 2019).
- Financial Stability Board. Final Report Recommendations of the Task Force on Climate-related Financial Disclosures. June 2017. Available online: https://www.fsb-tcfd.org/publications/final-recommendations-report/ (accessed on 28 September 2019).
- IAIS. Public Consultation: Draft Issues Paper on Climate Change Risks to the Insurance Sector. 29 April 2018. Available online: https://www.iaisweb.org/page/consultations/closed-consultations/2018/draft-issues-paper-on-climate-change-risks-to-the-insurance-sector (accessed on 28 September 2019).
- UNEP FI. Principles for Responsible Banking. July 2019. Available online: https://www.unepfi.org/wordpress/wp-content/uploads/2019/07/FINAL-PRB-Signature-Document-2-Interactive-22-07-19.pdf (accessed on 28 September 2019).
- European Commission. Communication from the Commission a Sustainable Europe for a Better World: A European Union Strategy for Sustainable Development, COM/2001/0264 final (15 May 2001).
- European Council. Renewed EU Sustainable Development Strategy, 10917/06 (26 June 2006).
- European Commission. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions—Mainstreaming sustainable development into EU policies: 2009 Review of the European Union Strategy for Sustainable Development, COM (2009) 400 final (24 July 2009).
- EU Commission. Europe 2020: A strategy for smart, sustainable and inclusive growth, COM (2010) 2020 final (3 March 2010).
- EU Commission. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Next steps for a sustainable European future European action for sustainability, COM (2016) 739 final (22 November 2016).
- EU Commission. Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions, Action Plan: Financing Sustainable Growth, COM (2018) 97 final (March 2018).
- UN Environment-Finance Initiative. Changing Course. 2019. Available online: https://www.unepfi.org/publications/investment-publications/changing-course-a-comprehensive-investor-guide-to-scenario-based-methods-for-climate-risk-assessment-in-response-to-the-tcfd/ (accessed on 28 September 2019).
- HLEG. Final Report. 2018. Available online: https://ec.europa.eu/info/sites/info/files/180131-sustainable-finance-final-report_en.pdf (accessed on 28 September 2019).
- European Commission. Formal request to EIOPA and ESMA for technical advices on potential amendments to, or introduction of, delegated acts under Directive 2009/65/EC, Directive 2009/138/EC, Directive 2011/61/EU, Directive 2014/65/EU and Directive 2016/97/EU with regard to the integration of sustainability risks and sustainability factors (24 July 2018).
- European Commission. Request to EIOPA for an opinion on sustainability within Solvency II (28 August 2018). Available online: https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/180828-letter-eiopa-solvency-2_en.pdf (accessed on 28 September 2019).
- Proposal for a regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, COM (2018) 353/978670 (24 May 2018).
- Proposal for a regulation of the European Parliament and of the Council on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341, COM (2018)354/978576 (24 May 2018).
- Proposal for a regulation of the European Parliament and of the Council amending Regulation (EU) 2016/1011 on low carbon benchmarks and positive carbon impact benchmarks, COM (2018) 355/978587 (24 May 2018).
- ESMA. Consultation Paper on Integrating Sustainability Risks and Factors in MiFID II; ESMA: Paris, France, 2018. [Google Scholar]
- ESMA. Final Report. ESMA’s technical advice to the European Commission on integrating sustainability risks and factors in MiFID II (30 April 2019).
- ESMA. Final Report. ESMA’s technical advice to the European Commission on integrating sustainability risks and factors in the UCITS Directive and AIFMD (30 April 2019).
- EIOPA. Technical Advice on the integration of sustainability risks and factors in the delegated acts under Solvency II and IDD’, EIOPA-BoS-19/172 30 (April 2019).
- Letter from DG FISMA on sustainability within Solvency II (28 August 2018). Available online: https://eiopa.europa.eu/Publications/Requests%20for%20advice/signed_letter_28_08_18.pdf (accessed on 28 September 2019).
- Technical Expert Group on Sustainable Finance. TEG report on EU taxonomy (18 June 2019). Available online: https://ec.europa.eu/info/files/190618-sustainable-finance-teg-report-taxonomy_en (accessed on 28 September 2019).
- Technical Expert Group on Sustainable Finance. TEG Report on EU Green Bond Standard. Available online: https://ec.europa.eu/info/files/190618-sustainable-finance-teg-report-green-bond-standard_en (accessed on 28 September 2019).
- Technical Expert Group on Sustainable Finance. TEG Interim Report on EU Climate Benchmarks and Benchmarks’ ESG Disclosures. Available online: https://ec.europa.eu/info/files/190618-sustainable-finance-teg-report-climate-benchmarks-and-disclosures_en (accessed on 28 September 2019).
- Extension of the Mandate of the Technical Expert Group on Sustainable Finance (TEG). Available online: https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190618-sustainable-finance-teg-extension_en.pdf (accessed on 28 September 2019).
- Clark, R.C. The soundness of financial intermediaries. Yale Law J. 1976, 86, 1–102. [Google Scholar] [CrossRef]
- Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II).
- Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (MiFID I).
- Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (MiFIR).
- Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS).
- Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 (AIFMD).
- Directive (EU) 2016/97 of the European Parliament and of the Council of 20 January 2016 on insurance distribution (recast).
- Regulation 1286/2014/EU of the European Parliament and of the Council of 26 november 2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).
- Colaert, V. Building blocks of investor protection: All-embracing regulation tightens its grip. J. Eur. Consum. Mark. Law 2017, 6, 229–244. [Google Scholar] [CrossRef]
- Moloney, N. How to Protect Investors: Lessons from the EC and the UK; Cambridge University Press: Cambridge, UK, 2010. [Google Scholar]
- Moloney, N. Regulating the retail markets. In The Oxford Handbook of Financial Regulation; Moloney, N., Ferran, E., Payne, J., Eds.; Oxford University Press: Oxford, UK, 2015; pp. 736–765. [Google Scholar]
- Siri, M.; Zhu, S. EU Investor. In Dictionary of Statuses within EU Law; Bartolini, A., Ed.; Springer International Publishing: Cham, Switzerland, 2019; pp. 209–217. [Google Scholar]
- Securities and Markets Stakeholder Group (SMSG). Advice to ESMA (ESMA Consultation Papers On integrating sustainability risks and factors in MIFID, the UCITS Directive and AIFMD) (6 March 2019).
- Proposal for a Regulation of the European Parliament and of the Council on sustainability-related disclosures in the financial services sector. Confirmation of the final compromise text with a view to agreement (22 March 2019), Art 2(o)(t)(v).
- Council of the EU (Press Release), Sustainable finance: Council agrees position on a unified EU classification system (25 September 2019). Available online: https://www.consilium.europa.eu/en/press/press-releases/2019/09/25/sustainable-finance-council-agrees-position-on-a-unified-eu-classification-system/ (accessed on 28 September 2019).
- Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), Article 1.
- Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS IV).
- Enriques, L.; Gilotta, S. Disclosure and financial market regulation. In The Oxford Handbook on Financial Regulation; Moloney, N., Ferran, E., Payne, J., Eds.; Oxford University Press: Oxford, UK, 2015; pp. 511–536. [Google Scholar]
- Paredes, T.A. Blinded by the Light: Information Overload and Its Consequences for Securities Regulation. Wash. Univ. Law Q. 2003, 81, 417–485. [Google Scholar] [CrossRef]
- Barberis, N.; Thaler, R. A survey of behavioural finance. In Handbook of the Economics of Finance: Financial Markets and Asset Pricing; Constantinides, G., Harris, M., Stulz, R.M., Eds.; North-Holland Publishing: Amsterdam, The Netherlands, 2003; pp. 1051–1121. [Google Scholar]
- Busch, T.; Bauer, R.; Orlitzky, M. Sustainable Development and Financial Markets. Bus. Soc. 2016, 55, 303–329. [Google Scholar] [CrossRef]
- Schoenmaker, D.; Schramade, W. Investing for Long-Term Value Creation. Erasmus Platform for Sustainable Value Creation Working Paper 1/2018. Available online: https://ssrn.com/abstract=3248912 or http://dx.doi.org/10.2139/ssrn.3248912 (accessed on 28 September 2019).
- Berg, F.; Koelbel, J.F.; Rigobon, R. Aggregate Confusion: The Divergence of ESG Ratings. MIT Sloan School Working Paper 5822-19. Available online: https://www.eticanews.it/wp-content/uploads/2019/09/20190819MITdivergenceESGratings.pdf (accessed on 28 September 2019).
- Lee, L.-E.; Moscardi, M. Looking Beyond Sustainability Disclosure. The Harvard Law School Forum on Corporate Governance and Financial Regulation (28 February 2018). Available online: https://corpgov.law.harvard.edu/2018/02/28/looking-beyond-sustainability-disclosure (accessed on 28 September 2019).
- European Commission. Guidelines on non-financial reporting 2017/C 215/01. Available online: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52017XC0705(01)&from=EN (accessed on 28 September 2019).
- European Commission. Guidelines on Non-Financial Reporting: Supplement on Reporting Climate-Related Information, C (2019) 4490 Final (17 June 2019). Available online: https://ec.europa.eu/finance/docs/policy/190618-climate-related-information-reporting-guidelines_en.pdf (accessed on 28 September 2019).
- EU Technical Expert Group on Sustainable Finance. Report on Climate-Related Disclosures (10 January 2019). Available online: https://ec.europa.eu/info/sites/info/files/business_economy_euro/banking_and_finance/documents/190110-sustainable-finance-teg-report-climate-related-disclosures_en.pdf (accessed on 28 September 2019).
- Stolowy, H.; Paugam, L. The expansion of non-financial reporting: An exploratory study. Account. Bus. Res. 2018, 48, 525–548. [Google Scholar] [CrossRef]
- Crooks, E. ExxonMobil Bows to Shareholder Pressure on Climate Reporting. Financial Times (12 December 2017). Available online: https://www.ft.com/content/8bd1f73a-dedf-11e7-a8a4-0a1e63a52f9c (accessed on 28 September 2019).
- Raval, A. BP shareholders vote in favour of greater climate disclosure. Financial Times. (21 May 2019). Available online: https://www.ft.com/content/fcb14d66-7bcd-11e9-81d2-f785092ab560 (accessed on 28 September 2019).
- Dyck, A.; Lins, K.V.; Roth, L.; Wagner, H.F. Do Institutional Investors Drive Corporate Social Responsibility? International Evidence. J. Financ. Econ. 2019, 131, 693–714. [Google Scholar] [CrossRef]
- European Space Agency Website. Nitrogen Dioxide Pollution Map. Available online: https://www.esa.int/Our_Activities/Observing_the_Earth/Copernicus/Sentinel-5P/Nitrogen_dioxide_pollution_mapped (accessed on 28 September 2019).
- Tuch, A.F. Conduct of business regulation. In The Oxford Handbook on Financial Regulation; Moloney, N., Ferran, E., Payne, J., Eds.; Oxford University press: Oxford, UK, 2015; pp. 537–567. [Google Scholar]
- Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field.
- Enriques, L.; Gargantini, M. The overarching duty to act in the best interest of the client in MiFID II. In Regulation of the EU Financial Markets: MiFID II and MiFIR; Busch, D., Ferrarini, G., Eds.; Oxford University Press: Oxford, UK, 2017; pp. 85–122. [Google Scholar]
- Commission Delegated Regulation (EU)/amending Regulation (EU) 2017/565 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive, Ares(2018)2581500 (Draft).
- ESMA. Final Report, Guidelines on Certain Aspects of the MiFID II Suitability Requirements, 35-43-869; ESMA: Paris, France, 2018. [Google Scholar]
- Kumpan, C.; Leyens, P.C. Conflicts of Interest of Financial Intermediaries—Towards a Global Common Core in Conflicts of Interest Regulation. Eur. Co. Financ. Law Rev. 2008, 4, 72–100. Available online: https://ssrn.com/abstract=1119546 (accessed on 28 September 2019). [CrossRef]
- Boatright, J.R. Financial services. In Conflict of Interest in the Professions; Davis, M., Stark, A., Eds.; Oxford University Press: Oxford, UK, 2011; pp. 217–236. [Google Scholar]
- Helleringer, G.; Skinner, C. Conflicts of interest. In Governance of Financial Institutions; Busch, D., Ferrarini, G., Van Solinge, G., Eds.; Oxford University Press: Oxford, UK, 2019; p. 501. [Google Scholar]
- Grundmann, S.; Hacker, P. Conflicts of interest. In Regulation of the EU Financial Markets: MiFID II and MiFIR; Busch, D., Ferrarini, G., Eds.; Oxford University Press: Oxford, UK, 2016; p. 175. [Google Scholar]
- Commission Delegated Regulation (EU)/of 25.4.2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive.
- ESMA. Consultation Paper on Integrating Sustainability Risks and Factors in the UCITS Directive and AIFMD; ESMA: Paris, France, 2018. [Google Scholar]
- European Securities and Markets Authority (ESMA). Opinion. Structured Retail Products—Good Practices for Product Governance Arrangements; ESMA: Paris, France, 2014; (ESMA/2014/332, March 2016).
- ESMA. Guidelines on MiFID II Product Governance Requirements; ESMA: Paris, France, 2018; ESMA35-43-620.
- Busch, D. Product Governance and Product Intervention under MiFID/MiFID. In Regulation of the EU Financial Markets: MiFID II and MiFIR; Busch, D., Ferrarini, G., Eds.; Oxford University Press: Oxford, UK, 2017; p. 175. [Google Scholar]
- Expert Group on Financial Education. The Financial Crisis and Financial Education (2009).
- OECD/INFE. International Survey of Adult financial literacy competencies (2016).
- Maijoor, S. Financial education and investor protection in Europe: the role of ESMA. In Proceedings of the IOSCO World Investor Week—ESMA Conference, Paris, France, 3 October 2017. [Google Scholar]
- Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority) (ESMA Regulation).
- Regulation (EU) No 1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority) (EBA Regulation).
- Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA Regulation).
- EIOPA. Report on Financial Literacy and Education Initiatives by Competent Authorities; EIOPA: Frankfurt, Germany, 2011. [Google Scholar]
- EBA. EBA Financial Education Report 2017/2018; EBA: London, UK, 2018. [Google Scholar]
- Baeza, C. EduFin Summit 2018: How can financial education contribute to achieving the UN Sustainable Development Goals? Available online: https://www.bbva.com/en/edufin-summit-2018-how-can-financial-education-contribute-to-achieving-the-un-sustainable-development-goals/ (accessed on 28 September 2019).
- Thaler, R. From Homo Economicus to Homo Sapiens. J. Econ. Perspect. 2000, 14, 133–141. Available online: http://www.jstor.org/stable/2647056 (accessed on 28 September 2019). [CrossRef] [Green Version]
- Pinney, C.; Lawrence, S.; Lau, S. Sustainability and Capital Markets—Are We There Yet? J. Appl. Corp. Financ. 2019, 31, 86–91. [Google Scholar] [CrossRef]
- Jones, R.J.; Reilly, T.M.; Cox, M.Z.; Cole, B.M. Gender Makes a Difference: Investigating Consumer Purchasing Behavior and Attitudes Toward Corporate Social Responsibility Policies. Corp. Soc. Responsib. Environ. Manag. 2017, 24, 133–144. [Google Scholar] [CrossRef]
- Luchs, M.G.; Mooradian, T.A. Sex, personality, and sustainable consumer behavior: Elucidating the gender effect. J. Consum. Policy 2012, 35, 127–144. [Google Scholar] [CrossRef]
- Bertrand, M.; Mullainathan, S. Do People Mean What They Say? Implications for Subjective Survey Data. MIT Economics Working Paper No. 01-04. 2001. Available online: https://ssrn.com/abstract=260131 or http://dx.doi.org/10.2139/ssrn.260131 (accessed on 28 September 2019).
- Brown, T.J.; Dacin, P.A. The company and the product: Corporate associations and consumer product responses. J. Mark. 1997, 61, 68–84. [Google Scholar] [CrossRef]
- Thaler, R.H.; Sunstein, C.R. Nudge; Yale University Press: New Haven, CT, USA, 2008. [Google Scholar]
- Mohr, L.A.; Webb, D.J.; Harris, K.E. Do consumers expect companies to be socially responsible? The impact of corporate social responsibility on buying behavior. J. Consum. Aff. 2001, 35, 45–72. [Google Scholar] [CrossRef]
- Trapero, F.G.A.; De Lozada, V.D.C.M.; García, J.D.L.G. Consumers and their buying decision making based on price and information about corporate social responsibility (CSR). Case study: undergraduate students from a private university in Mexico. Estudios Gerenc. 2010, 26, 103–117. [Google Scholar] [CrossRef]
- Kahneman, D.; Tversky, A. Prospect Theory: An Analysis of Decision under Risk. Econometrica 1979, 47, 363–391. [Google Scholar] [CrossRef]
© 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Share and Cite
Siri, M.; Zhu, S. Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda. Sustainability 2019, 11, 6292. https://doi.org/10.3390/su11226292
Siri M, Zhu S. Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda. Sustainability. 2019; 11(22):6292. https://doi.org/10.3390/su11226292
Chicago/Turabian StyleSiri, Michele, and Shanshan Zhu. 2019. "Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda" Sustainability 11, no. 22: 6292. https://doi.org/10.3390/su11226292
APA StyleSiri, M., & Zhu, S. (2019). Will the EU Commission Successfully Integrate Sustainability Risks and Factors in the Investor Protection Regime? A Research Agenda. Sustainability, 11(22), 6292. https://doi.org/10.3390/su11226292