SFDR – Financial Products & Helping Achieve a Sustainable Financial System
Tue Feb 16 2021
The correspondence below was recently sent to Michael McGrath TD, Minister for Public Expenditure and Reform, requesting that Insurance Based Investment Products conforming to ESG requirements are exempted from the 1pc levy and have a lower LEAT of 33pc from when the disclosure requirements are introduced on the 10th of March.
Dear Minister McGrath,
The Sustainable Finance Disclosure Regulation (SFDR) will, as you know, come into effect on the 10th of March 2021. The SFDR was introduced by the European Commission alongside the Taxonomy Regulation and the Low Carbon and Positive Impacts Benchmarks Regulation as part of a package of legislative measures arising from the European Commission’s Action Plan on Sustainable Finance.
A sustainable investment product is defined as being a product sold as promoting environmental or social characteristics.
The SFDR sets out harmonised rules on transparency and aims to include environmental, social and governance (ESG) sustainability considerations and risks in the decision- making process of investors and asset managers in a consistent manner across the EU financial services sector, a laudable objective.
It is envisaged that greater transparency and sustainability-related information will enable investors to compare financial products and to make informed investment decisions about ESG products.
The scope of the SFDR is broad, covering a wide range of financial products and financial market participants. It applies to ‘financial market participants’ (FMPs) across all sectors – fund managers, pension providers, insurance-based investment product providers, MiFID investment firms and credit institutions. The Regulation also applies to ‘financial advisers’, including an insurance intermediary who provides insurance advice with regard to Investment Based Insurance Products (IBIPs).
The SFDR introduces additional disclosure obligations for manufacturers of financial products and financial advisers toward end-investors. The Regulations will require impacted firms to integrate sustainability into their investment processes and to consider the adverse impacts of their investments on sustainability factors.
Brokers Ireland believes that it would help achieve the objective of the SFDR if Insurance Based Investment Products conforming to ESG requirements would be exempted from the 1pc levy and have a lower LEAT of 33pc from when the disclosure requirements are introduced on the 10th of March. It would greatly assist in the overall objective of promoting sustainable financial products and achieving a sustainable financial system.
We are available to discuss this issue, at a time of your convenience, should you wish.
We shall look forward to hearing from you.
Director of Financial Services