16 INSIDE NORDEA
Open door policy With the changes to MiFID II now in force, Paul Malpas, NAM’s ESG Distribution Lead , discusses the key elements of the recent regulatory change and the opportunities it opens up for advisers.
ments Directive (MiFID) II, delivered a major change for advisers: the need to incorporate sustainability preferences in the overall client suitability assessment.
Paul, can you give us a brief recap of the recent actions taken by the EU in relation to sustaina- ble investing? Sure. Put simply, the EU has introduced regula- tion that influences each link of the investment value chain. Firstly, under the EU Taxonomy classification system, the companies we invest in must report on their sustainable economic activi- ties – aligned to six environmental objectives. As for asset managers, the readers of nordic friends will be familiar with the Sustainable Finance Disclosure Regulation, or SFDR. This requires NAM and all other asset managers to disclose the sustainability of their products and processes. Under the SFDR Article classification, strategies promoting environmental or social characteristics are labelled as Article 8, while those with sustainable investments as the invest- ment objective are Article 9.
What has been one of the major impacts of the MiFID II changes?
The MiFID evolution undoubtedly heightened the complexity for advisers. For example, the ex- panded MiFID II regime goes above and beyond SFDR product categorisation. While all products labelled as Article 9 under SFDR are eligible for advisers to incorporate into sustainable portfolios under MiFID, it cannot be taken for granted that Article 8 funds automatically qualify. Under Mi- FID, there are additional criteria that managers of investment products must meet, over and above an Article 8 label. This may be why we continue to witness fund classification changes across the industry.
Do advisers still face challenges today in relation to MiFID and sustainability?
Of course. We have spoken about this previously, but advisers must pay close attention to where they set the bar in relation to the sustainability
The next major stop on the regulatory journey, the extension to the Markets in Financial Instru-
nordic friends
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