Financial Crime World

EU Regulation Calls for Transparency in Environmental, Social Characteristics and Sustainable Investment

The European Union has introduced a raft of regulations aimed at promoting environmental and social responsibility in investment practices. In a bid to ensure transparency and accountability among financial institutions, the EU’s Commission Delegated Regulation (EU) 2021/2178 sets out specific requirements for disclosing information related to environmentally sustainable economic activities.

Key Requirements

  • Financial institutions will be required to provide clear and concise information about their environmental, social, and governance (ESG) practices in pre-contractual documents, websites, and periodic reports.
  • Information must include details on the types of sustainable investments offered, as well as any specific ESG criteria used to evaluate these investments.

Broader Effort

The EU’s regulation is part of a broader effort to promote sustainability in financial markets. In 2020, the European Parliament and Council introduced Regulation (EU) 2020/852, which established a framework for sustainable investment and aimed to encourage financial institutions to prioritize environmentally friendly and socially responsible practices.

  • The Czech National Bank (CNB) has published a range of decrees and regulations aimed at promoting transparency and stability in the country’s financial sector.
    • Decree No. 209/2021 Coll. sets out requirements for the remuneration and reimbursement of cash expenditures by liquidators of banks and credit unions.
    • Decree No. 426/2013 Coll. and Decree No. 346/2013 Coll. govern the reporting of credit unions and banks to the Czech National Bank.

EU Guidelines

As part of its efforts to promote transparency and accountability in financial markets, the EU has also published a range of guidelines and recommendations for financial institutions. These include:

  • The Sustainable Finance Disclosure Regulation (SFDR), which sets out requirements for financial institutions to disclose ESG risks and opportunities associated with their investment products.

Conclusion

The EU’s latest regulations aim to promote transparency and accountability in environmental, social, and governance practices among financial institutions, while also encouraging sustainable investment practices that prioritize long-term economic growth and stability.