Brussels seeks to make responsible investment Priips “credible”

ESG_investingEuropean regulators have begun consulting on standards for certain retail investment products that claim positive environmental or social benefits.

The three European Supervisory Authorities (ESAs) have proposed to set minimum requirements for fund manufacturers that offer types of responsible investment vehicles covered by the Packaged Retail and Insurance-based Investment Products (Priips) Regulation.

The ESAs, which include the European Securities and Markets Authority, want to ensure that environmental or social Priips sold to retail investors are credible.

The consultation on ‘EoS Priips’ comes after the European Commission called for advice.

It is proposed that manufacturers of an Eos Priips should have specific governance measures in place to ensure that environmental or social objectives are met on an ongoing basis. They must also be able to demonstrate the relevance of these objectives to retail investors throughout the investment process, according to the ESAs.

Priips is a regulation that intends to bring more transparency to financial products for greater investor protection.

Although existing product oversight and governance provisions laid down in relevant legislation for Priips are generally found to be sufficient, the ESAs said the European Commission should provide additional guidance for EoS Priips manufacturers when interpreting these rules.

The consultation ends on March 23.

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