Responsible finance is finance that integrates extra-financial components into its economic model, such as the fight against money laundering, fraud and corruption, and the protection of the integrity of financial markets. It is finance that serves mankind and the planet.
There are many different ways of defining Responsible Finance – green, sustainable, solidarity-based – which often creates confusion and exclusion. Is green finance sustainable? Is sustainable finance based on solidarity? Let’s go back to the definitions:
A successful social & ecological transition will be one that takes into account not just the decarbonization of activities, but also all the social and environmental impacts as identified by the United Nations’ 17 Sustainable Development Goals in 2015.
Several definitions for a single objective: to make tomorrow’s finance sector a major player in change. Sustainable, green and social finance are all integral parts of Responsible Finance.
Since the Kyoto Protocol in 1995, a number of initiatives have been launched, including the Finansol solidarity finance label (1997), UNPRI (2006), LuxFlag label (2006), SRI label (2016), Greenfin (2019), European Green Deal (2020),…
Europe, which has been committed to the production of responsible finance standards & regulations, estimated at over 2,000 legislative proposals since 2016 worldwide, is thus on the verge of delivering to investment firms a significant regulatory burden that they will have to manage operationally in a very short timeframe2)European regulation: AMF Doctrine & Regulation disclosure by Sarah Labbé – AFR & Scaled Risk.
But the regulation doesn’t stop there: “By December 31, 2021, the Commission will have to publish a report describing the provisions that would enable the scope of the regulation to be extended beyond environmentally sustainable activities to include other sustainability objectives, such as social objectives“.
Implementation of the first two targets from 2022 and the following 4 until 2023.
This regulation comes into force in March 2021
Effective until December 31, 2021
The objectives are3)July 2019 AMF report “European regulatory update: progress on sustainable finance work (Disclosure and Benchmark):
As the guardians of ethics, our compliance officer professions refer to the obligation to respect professional and ethical standards, codes of conduct and specific rules applicable to an activity.
Compliance therefore goes beyond the scope of legal norms, to encompass a series of standards that are imposed on the company. It also refers to a company’s ability to put in place processes designed to ensure good governance.
In this sense, taking environmental and social issues into account will have an impact on compliance programs, updating risk mapping, procedures and controls. Just as MIFID II was a regulatory tsunami, a second wave just as big is on its way, and we need to get ready. Surrounding yourself, communicating and enlisting the help of others with regard to all these forthcoming regulations is essential if you are to maintain a robust and reliable compliance system.
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