MiFID II and IDD Sustainability Preferences Checklist: An Essential Tool for Financial Product Distributors in the EU

Distributors of financial products within the EU need to prepare for increase in regulatory attention for MiFID II and IDD sustainability requirements

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Since August 2022, distributors of financial instruments in the EU have been required to collect clients’ sustainability preferences to ensure any financial products sold to them match their sustainability preferences. This regulation primarily applies to investment firms offering investment advice (including Robo-advice) and portfolio management (e.g. wealth managers), but also applies to credit institutions, asset managers, and investment advisers who offer advice or portfolio management. The parallel regulation impacting insurance companies and brokers (via the Insurance Distribution Directive, IDD) mirrors the requirements under MiFID II. 

ESMA’s guidelines on how to collect and match sustainability preferences came into force in October 2023. In 2024, ESMA – through its national competent authorities – launched a common supervisory activity (CSA) aimed at assessing the level of compliance within the industry in collecting and matching clients’ sustainability preferences. We expect the increase in regulatory scrutiny over MiFID II sustainability preferences to continue to grow throughout 2024 and into 2025.

To help managers bring their practices inline with the regulation, Clarity AI has created a straightforward MiFID II and IDD sustainability preferences checklist to either refine their existing practices, or begin to comply with the regulation.

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Align with regulators´ expectations, enhance your customer investment experience and lead the way towards a more sustainable world. As the leading sustainability tech platform, Clarity AI can support your firm with tailored solutions, leveraging our market-leading dataset for SFDR and EU Taxonomy, and a ready-to-use classification system, to solve for time and resources constraints. Contact us if you have any questions or to book a demo.