ESG Risks, Compliance & Disclosures for Investment Services Market Players

In this Article

Dr Jane Nweike

Dr Jane Nweike expands on ESG risks and compliance, and disclosures for players in the investment sector. She also pays particular attention to the Taxonomy Regulation and its implication for the investment sector. For further information on MK Fintech Partners and our Services for Investment Firms, contact us via


ESG Risks and Compliance

There is various EU legislation which aim to encourage the channelling of private capital towards sustainable investments. The EU Taxonomy Regulation seeks to achieve this aim by setting out criteria by which investments can be classified as sustainable. It also suggests creating reporting obligations for various investment sector actors.

By setting such criteria, the legislation first helps to create uniform labels used to describe investment products. Second, it helps in reducing ‘greenwashing’, and enables investors to make informed decisions on their investments in sustainable activities. The EU Taxonomy Regulation is truly a key regulation regarding sustainable investments.

To Whom does the EU Taxonomy Apply to?

ESG Risks and Compliance

Article 9 of the Taxonomy sets out the following as environmental objectives.

  • Climate change mitigation.
  • Adaptation to climate change.
  • The sustainable use and protection of water and marine resources.
  • Transition to a circular economy.
  • Pollution prevention and control.
  • Protection and restoration of biodiversity and ecosystems.

An economic activity meets the criteria of the Taxonomy if it contributes to the above objectives, does not significantly harm any of the objectives, is carried out in accordance with the minimum safeguards set out in the Taxonomy (i.e. in alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Human and Business Rights and other UN principles), and complies with the technical screening criteria laid down by the European Commission.

What are the Disclosure Obligations for Financial Market Participants under the Taxonomy?

ESG Risks and Compliance

Financial market participants are, in general, required to disclose in pre-contractual disclosures and in periodic reports. Such as:

a) Information on the environmental objective(s) to which the investment in the underlying financial product contributes. 

A description of how and to what extent the investments underlying the
financial products are economic activities that qualify as sustainable
investments under the Taxonomy.

The disclosure obligations in respect to the first two environmental objectives listed above entered into force on January 1st, 2022. While the disclosure obligations in respect of the remaining objectives will enter into force on January 1st, 2023.

Other Applicable Legislation

ESG Risks and Compliance

Other EU regulations which create disclosure obligations for financial market participants include: – 

  • The Sustainable Finance Disclosure Regulation. Which requires sustainability related disclosures to be made on websites and in pre-contractual disclosures.
  • Low Carbon Benchmarks Regulation. Which requires benchmark administrators to include details of how their benchmarks incorporate ESG factors. This regulation may impact fund managers and other financial market participants to the extent that they are users of these benchmarks.
DLT Pilot Regime Regulation Regulation on crypto-assets Distributed ledger technology (DLT) Fintech industry MK Fintech Partners Advocates Legal Assistants

How Can We Help?

ESG Risks and Compliance

Our experienced team can assist you with:

  • Incorporating a Maltese company
  • Reviewing your business plan or preparing one for you from scratch
  • Preparing the registration application and compiling supporting documents
  • Liaising with the MFSA and accompanying you to all pre-application meetings
  • Filing all fit and proper tests for all key persons for the MFSA’s approval
  • Drafting MFSA response letters as may be required
  • Referrals to competent persons in our network to fill any needed roles (audit firms, etc.)
  • Any other legal support required throughout the application process

Contact us at for any support you may need.

Key Contact

Jane Chinwe Nweike

International Lawyer

More about MK Fintech Partners Ltd.

Michael Kyprianou Fintech Partners Ltd. is a Maltese company providing services in the FinTech sector. It comprises a team of dedicated experts who provide services such as Legal Advisory, Crypto Licensing, Token Issuers’ Licensing, Investment Services Licensing, and registrations of activities related to Fintech, Crypto, Blockchain & Data Protection, Investment Funds Services & Banking, Company Incorporations, and M&As.

MK Fintech Partners forms part of the Michael Kyprianou Group, a top tier international legal and advisory firm. It has established an enviable reputation as a broad-based legal practice over the years. Mainly by keeping at heart its principle to always exceed its clients’ expectations. MK has grown to become one of the largest law firms in Cyprus with offices in Nicosia, Limassol and Paphos. The MK Group’s international presence also includes fully-fledged offices in Greece (Athens and Thessaloniki), Malta (Birkirkara), Ukraine (Kiev), the United Arab Emirates (Dubai), United Kingdom (London), Israel (Tel Aviv), and Germany (Frankfurt).

The content of this article is valid as at the date of its first publication. It intendeds to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on a specific matter before acting on any information provided. For further information, contact us at MK Fintech Partners via email at or by telephone +356 2016 1010.

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