Integrating Sustainability in the MiFID II Package-Based Regulation: Effects on Financial Intermediaries’ Accountability and Potential Conflict Between Regulatory Objectives

The chapter critically analyses the amendments to the delegated acts concerned, put forward in the sustainable finance package of 21 April 2021. It argues that EU policy on sustainable finance in this regulatory context is able to create an additional accountability framework for financial intermediaries but, if not properly enforced, this sustainability-related reform could jeopardise the protection of financial investors due to the adoption of a product-oriented model for the distribution of sustainable financial instruments. The chapter begins by outlining the legal basis and rationale for sustainable finance regulation at EU level. It goes on to examine the amendments to the legislation that introduce sustainability concerns into the rules of conduct laid down in the European Commission Delegated Regulation (EU) 2017/565 regarding certain organisational requirements and operating conditions for investment firms, and the product governance norms established in the European Commission Delegated Directive (UE) 2017/ 593. The analysis highlights the weaknesses in the new rules, despite the effort of the European Commission to address the potential conflict between the two worthwhile regulatory objectives: ensuring sustainability and investor protection.