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

Published: September 23, 2024

Modified: July 5, 2025

KEY TAKEAWAYS

Distributors of financial products within the EU need to prepare for increase in regulatory attention for MiFID II and IDD sustainability requirements.
Compliance with sustainability preference regulations is essential for investment firms, wealth managers, asset managers, and insurance brokers.
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.

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.

Preparing for Increased Regulatory Scrutiny

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.

How Clarity AI Can Help

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.

Author Information

Tom Willman

Regulatory Lead, Clarity AI

Tom is Regulatory Lead at Clarity AI. He leads on Clarity AI's regulatory engagement and focuses on ensuring Clarity AI's regulatory products are up to date with the latest developments. Prior to joining Clarity AI Tom was a regulator at the UK FCA and IOSCO.

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