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From now on, the sustainability preferences of investors will have to be queried and taken into account when selecting products. A whole series of new rules, which will gradually come into force, will create more ESG awareness in the product world. ESG stands for environmental, social and governance.
"The entire financial market will change and with it many corporate industries. For employees and customers, it is therefore essential to get a solid basic understanding of sustainability issues." Raul Engelke, CEO and co-founder of ESG Academy provider e-Mission GmbH, describing the challenge.
"This is taught in our Basic course. In addition, we offer an advanced course specifically for financial advisors."
The EU taxonomy as a central instrument
Of particular importance is the EU taxonomy, which determines when and how an investment is to be rated as green. Jörg Müller, Senior Partner at the consulting agency Christ & Company in Berlin underlines:
"The positive impact reference according to the EU Taxonomy Regulation is the sustainability attribute. The EU Taxonomy is considered a central instrument in the context of Sustainable Finance projects at the European level and is intended to help classify economic activities under sustainability aspects. Innovative knowledge transfer like e-Mission creates transparency and comparability."
New rules also for product characteristics, have been laid down in the delegated regulation, which supplements the EU financial market directive MifiD II. But the associations of the German banking industry, the German fund association BVI and the German derivatives association DDV have also worked on further recommendations that go far beyond the EU directive to determine a target market for sustainable products.
Level 2 of the Disclosure Regulation will not come into force until the beginning of 2023
Even though things are now getting serious for investors and their advisors, the rules that MifiD II requires to be included in sales prospectuses from August onwards will still be delayed. Level 2 of the Disclosure Regulation, which comprises the detailed implementation requirements, i.e. the technical regulatory standards, will not come into force until the beginning of 2023. Only from that point on will it be mandatory to disclose information on sustainable properties in the sales prospectus.
"The time should therefore be used to bring one's own knowledge portfolio up to date. This applies equally to investor, advisor and also to each customer" says Engelke.
Providers of funds, sales organizations and banks therefore already use the e-Mission service.