The EU has told banks and insurers they must comply with the bloc’s new laws on sustainability-related disclosures from March, even though detailed guidance on how the rules work in practice will not be ready in time.
Last year the bloc approved a law designed to increase transparency on how financial institutions consider sustainability risks in their investment decisions and investment advice.
It includes consideration for cutting carbon emissions, social and employee matters, and respect for human rights. Firms will have to disclose publicly whether they see sustainability risks related to their investment decisions.
The EU’s banking, insurance and securities regulators had been aiming to publish guidelines on how the law’s principles would be implemented by December.
However in a letter to the regulators published today, the European Commission said the
“unprecedented economic and market stress” caused by the coronavirus pandemic meant that the deadline for issuing guidance could not be met.
John Berrigan, head of the Commission’s financial services division, said that while the delay was “unfortunate”, it was “justified by the need to guarantee sufficient stakeholder involvement in the process given the current difficult circumstances”.
While financial lawyers have said it is essential for the bloc to publish guidelines outlining what it means by sustainability risks, Berrigan said the law coming into force was not dependent on the guidance being ready.
“In order to provide financial market participants and financial advisers adequate time for implementation, the regulatory technical standards will become applicable at a later stage,” Berrigan said.