The Dutch Authority for the Financial Markets published an ESG update and supporting factsheet setting out what it expects from investment firms in meeting the sustainability requirements for product oversight and governance (POG) and the suitability assessment. The AFM’s review found that firms have made progress, but that compliance still needs to improve to ensure investors’ sustainability preferences are properly matched with the sustainability characteristics of investment products. Across the six investment firms assessed, the AFM found the execution-only customer journey and the way sustainability is explained to clients are broadly on track. It identified the need for additional steps in target market determination and in collecting clients’ sustainability preferences: for POG, firms should specify sustainability objectives in sufficient detail in the (negative) target market, preferably using the three statutory categories of sustainability preferences (taxonomy investments, SFDR investments, and investments that consider principal adverse impacts). For suitability assessments, firms should gather sufficiently granular information where clients express preferences within one or more of these categories, including minimum percentages where relevant. The AFM called on investment firms to take action to bring compliance with the sustainability provisions in order and pointed firms to its second ESG update and the accompanying factsheet as practical tools and examples.

Original source View in tracker