As of August 2, a European regulation amending the MiFID 2 directive comes into force. This regulation 2021/1253 was adopted in April 2021 and obliges financial intermediaries to focus their advice on ESG criteria.

ESG criteria

The environmental, social and governance criteria (= ESG) allow to classify a company regarding its policy on the different environmental and social issues:

    ° The environmental criterion: takes into account the impact of the company on its environment (its ability to manage its waste, to limit pollution).

    ° The social criterion: characterizes social dialogue, parity in the company and the well-being of employees.

    ° The governance criterion: ensures, among other things, the transparency of the company's management and the independence of the board of directors.

How do you know if a product respects ESG criteria?

The European SFDR regulation, which came into force on March 10, 2021, aims to provide more transparency in terms of environmental and social responsibility within the financial markets.

Regarding classification, the SFDR regulation provides 3 categories to classify funds and investment products:

    ° Article 6: funds and investment products that have no sustainability objectives.

    ° Article 8: these funds and products will include ESG criteria but they are not the focus of their investments.

    ° Article 9: investment products and funds that have a genuine sustainable investment objective.

What will this new regulation change?

When you contact a financial intermediary, such as an asset manager, he must determine with you your client profile, i.e. your risk appetite, your knowledge and other information that will help guide the investments that will be proposed to you.

From August 2, these intermediaries will also have to find out your preferences in terms of sustainability, in particular by asking specific questions such as

- How much of your assets do you want to devote to sustainable investments

- Are all the E, S, G criteria important to you or only two in particular?

Finally, the goal is for the client to be able to express his preferences on subjects that affect him. The intermediary will then have to propose funds and products in line with the interests and needs of his client.

Finance must be oriented towards sustainability, our asset management consultants are in contact with many partners and can offer you products that respect ESG criteria, while optimizing your assets. Contact us for more information!