Q&A · ESMA

Integration of sustainability within the MiFID II product governance requirements

Answered

Read the official text on the ESMA website(opens in a new tab)

AI-generated Summary

In a Commission answer, firms setting the negative target market for a product that does not consider sustainability factors must also consider any clients' sustainability-related objectives the product is incompatible with, though depending on the product this may result in no negative target market for that criterion.

Details

Reference	ESMA_QA_1966
Issuer	ESMA
Published	2 Oct 2023
Answered	2 Oct 2023
Submitted	2 Oct 2023
ESMA topics	Product governance

Provisions it relates to

Article 16 MiFID II · Organisational requirements
MiFID II
Inferred · 80%
Article 24 MiFID II · General principles and information to clients
MiFID II
Inferred · 75%
MiFID II (whole act)
Explicit reference

Documents it refers to

Delegated actIn forceExplicit reference
Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits
European Commission · 31 Mar 2017 · EUR-Lex
AI summaryThe MiFID II Delegated Directive on safeguarding client financial instruments and funds (deposits, use of client assets, title transfer collateral, a single officer responsible, auditor reports), product governance duties for manufacturers and distributors, and inducements, including rules for independent advice, portfolio management and research. Since amended, including by Delegated Directives 2021/1269 (sustainability) and 2026/374 (research payment).
GuidelinesPublishedExplicit reference
ESMA35-43-620: Guidelines on MiFID II product governance requirements
ESMA · the ESMA website
AI summaryESMA's original guidelines (ESMA35-43-620), applying from 3 January 2018, on the product governance obligations in Articles 16(3) and 24(2) MiFID II: how manufacturers identify a target market and distribution strategy, how distributors refine and review them, and issues common to both, with illustrative examples. ESMA has since issued revised guidelines.