Supervisory priorities in 2022
The role of the capital markets with respect to sustainability is a key agenda item for European and national legislators. This is also a prominent issue in our own Agenda. Whether this concerns fair pricing, integrated reporting or transparent information to consumers and investors. What are the supervisory priorities for the AFM in 2022?
Our supervision will have three main priorities:
- companies need to provide reliable and accessible information on sustainability factors in their business operations
- financial institutions need to include sustainability aspects in their business conduct, product development, risk management and investment decisions and be transparent in this respect
- consumers should be adequately informed and advised regarding sustainability factors and thus be offered financial products that suit their needs
Capital markets
Investors need to be in a position to take well-considered investment decisions, also for sustainable investments. This means it is important that providers are transparent regarding the sustainability characteristics of their financial products. In 2022, one of the aims of our supervision of the capital markets will be to ensure that market participants are prepared for compliance with sustainability regulation. This will concern trading in CO2 emissions derivatives, the ESG benchmarks and sustainability information in prospectuses. We will also focus on transparency with respect to sustainability risks at listed companies.
Asset management
Given the volume of its assets under management, the asset management sector can play a key role in the transition to a sustainable society. The sector needs to cater for the increasing number of investors wishing to invest sustainably, as well as comply with new legislation and regulation requiring asset managers to be transparent about their sustainability objectives. And finally, with new legislation and regulation that will attempt to define exactly what sustainability means. Greenwashing has to be prevented.
Regulation of non-financial and financial reporting
With respect to reporting, non-financial information is becoming more important. The AFM strongly believes in the importance of clear connection, also referred to as connectivity, between the financial and non-financial information reported by companies. Investors will then be better placed to understand the connection between non-financial performance and risks (social, environmental, ethical) and the impact of these risks on a company’s future financial performance. Non-financial information is not just about doing the right thing, it also means properly reporting what you are doing and how this affects your company’s financial position, the environment and the climate and the company’s future results. And also, with respect to dilemmas that companies face, such as growth versus footprint.
New regulation
2022 will feature the further development of initiatives from Europe and elsewhere and the development of implementation of measures already introduced, such as the Sustainable Finance Disclosure Regulation (SFDR), the EU Taxonomy, the proposal for an EU Green Bonds Standard and the Corporate Sustainability Reporting Directive (CSRD). The diversity of new regulation means that supervisors as well as market participants will have to face the challenge of preparing for the new requirements in 2022.
Read our Agenda for 2022
The AFM Agenda for 2021 describes the major trends and risks in the financial sector and describes the priorities and activities we will focus on in the coming year.
