The Markets in Financial Instruments Directive II (MiFiD II) requires financial advisors to assess the investor's preferences and match them with the advisor's recommended investments.
What do I need to know?
The Markets in Financial Instruments Directive II (MiFiD II) requires financial advisors to assess investor preferences and match them with the advisor's recommended investments. The new addition to MiFiD II further requires advisors to consider sustainability preferences.
As we move toward a greener and more sustainable economy, consumers face the risk of greenwashing if their investments are directed toward activities that are not aligned with their interests and values. Financial advisors therefore have a critical role to play in ensuring that consumers' sustainability preferences are realized through their investments.
MiFiD II is an important tool in the fight against greenwashing and for a greener economy, as financial advisors have an obligation to assess their clients' sustainability preferences and steer them towards suitable investments, not just the greatest financial return.
Why is it important?
The implementation of MiFiD II means that it is illegal for financial advisors to advise against an investor's sustainability profile, even if a greater financial benefit is gained by recommending another investment with a sustainability profile that does not fit.
Is it relevant for me?
The market is moving towards a much more sustainable profile, with sustainability being one of the main concerns of investors. Therefore, a policy like this could result in stranded assets if your real estate portfolio is "brown."
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The Corporate Sustainability Reporting Directive expands the obligations and scope of sustainability reporting for EU companies.
The aim of this Directive is to promote sustainable and responsible corporate action and to anchor human rights and environmental aspects in the business activities and corporate governance of companies.