Editorial - September 2022


Temps de lecture : min


Yes, finally, private clients will be asked about their "sustainability preferences".

It seems paradoxical, but until now no-one has sought their opinion, even though they are both the end beneficiary of the assets and the ultimate and main bearer of the risk. This should be a concern to us even if the "technical arguments" are in place: the timetable for the revision of EU regulations, in this case MiFID2 (and IDD for insurers) covering the distribution of financial products. However, one of the major objectives of the European Union is to ensure that the client/consumer/saver is protected and receives adequate information. Until now, information has been available through sustainability reports but, in reality, has only been of interest to supervisory authorities and NGOs, yet without explicit consent from those with the greatest interest. There has therefore clearly been an implicit exception with regard to measures associated with the concept of sustainability – largely dominated by climate issues.

It is interesting to note that the European Securities and Markets Authority (ESMA), in its consultation issued in the spring of 2022, acknowledges that few clients spontaneously raise the issue of their sustainability preferences. And for good reason, as most of them have only a vague idea of what it signifies.

First of all, the exercise will require the entire distribution chain to make sure that the client's needs and the financial product offering are well matched in terms of sustainability. In the early stages, the abstract concept of sustainability and the concrete reality of the risk to be taken on board by the client may raise many issues.

« The client will receive a rather simple questionnaire of somewhat binary appearance, but which will subsequently also have major implications for the structuring and management of the financial products. »


Even more importantly, it is also the official aim of the exercise to continue to "target" investments in favour of energy transition.

Such preferences will be evoked via three distinct questionnaires associated with specific EU legislation, namely the EU Environmental Taxonomy, the SFDR regulation and the PAIs (Principle Adverse Impacts).

It should be noted that all this legislation is far from complete, let alone from being the finished article. There are certainly many definitions that are presented precisely as they refer to multiple pieces of other legislation but which, in reality, are all highly interpretable. This brings us back to the general problem of the lack of standardisation due to the low level of maturity of all the players in this field. The regulators have therefore cautiously left the drafting of the questionnaires entirely to the distributors and have not gone into any of the three components in any great detail. We consequently only note a structural increase in regulatory risk.

Let us hope that this accelerated process of collective learning will eventually be reflected in truly informed and explicit choices by end clients.


Written by
Yannick Tatibouët

Director of Strategic Intelligence, External Relations, and coordination on sustainable finance

September 16, 2022

Covéa Finance, a portfolio management company of the MAAF, MMA and GMF groups with share capital of €24 901 254, incorporated as a single-person simplified joint stock company, registered with the Paris Trade and Companies Register under number 407 625 607 and approved by the French Financial Markets Authority under number GP 97 007.

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