MEPs support enhanced sustainability disclosure in the Listing Act

Posted on 24 October 2023

Today, MEPs from the Committee on Economic and Monetary Affairs committed to advancing sustainable finance by voting on the Listing Act.
The Listing Act includes amendments to the Prospectus Regulation, which sets the rules for creating a prospectus that offers essential information to investors when securities (bonds and shares) are made available to the public or listed on a regulated market within the EU.

A majority of retail investors want to invest sustainably (1). Integrating the information on the environmental performance of the companies they are considering for investment in the summary of the prospectus can help them make more informed decisions. 

In addition, WWF welcomes the introduction of a notification to warn investors that the company has identified environmental issues as a material risk factor. Investments that are exposed to fossil fuels activities can increasingly lead to “stranded assets” making it essential for investors to be duly informed about such risks. WWF suggests taking an additional step by introducing a "Sustainability Alert" mechanism - a tool designed to warn investors when their investment choices do not align with the objectives of the Paris Climate Agreement. 

Mathilde Nonnon, Sustainable Finance Policy Officer said: “The Committee on Economic and Monetary Affairs has taken a positive stride forward by integrating information on environmentally sustainable activities of undertaking activities into the summary prospectus. This move enhances transparency on environmental issues and serves the interests of retail investors while creating consistency across various pieces of EU legislation. It is another step to ensure that retail investors will be well informed about the sustainability of their investments”

Moreover, this progress should set a precedent for extending the same disclosure to the PRIIPS (Packaged Retail and Insurance-based Investment Products)’ Key Information Document. Currently undergoing revision within the framework of the EU Retail Investment Strategy, the PRIIPS Regulation primarily covers funds. Ensuring alignment with the Prospectus, which addresses shares and bonds, is pivotal for delivering comprehensive sustainability disclosures to investors across the board.

Note to editors: 
(1) - Natixis (2016), Mind shift: getting past the screens of responsible investing;
- Schroeders (2017), Global Perspectives on sustainable investing;
- University of Cambridge (2019), “Walking the talk: Understanding consumer demand for sustainable investing”;
- 2° Investing Initiative (2020), “A Large Majority of Retail Clients Want to Invest Sustainably” provides a larger overview
- Maastricht University (2021) “Get Real, Individuals Prefer More Sustainable Investments;
MEPs support enhanced sustainability disclosure in the Listing Act
MEPs support enhanced sustainability disclosure in the Listing Act
© Alecu Buse