title: COMMISSION DELEGATED DIRECTIVE (EU) .../… amending, for the purposes of adapting to scientific and technical progress, Annex III to Directive 2011/65/EU of the European Parliament and of the Council as regards an exemption for the use of certain lead and hexavalent chromium compounds in electric and electronic initiators of explosives for civil (professional) use

text:
               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE DELEGATED ACT

               This Commission Delegated Directive amends, for the purpose of adapting to technical progress, Annex III of Directive 2011/65/EU of the European Parliament and of the Council on the restriction of the use of certain hazardous substances in electrical and electronic equipment (recast)
                  1
                (RoHS) as regards an exemption for specific applications containing lead and hexavalent chromium.

               RoHS restricts the use of certain hazardous substances in electrical and electronic equipment, as provided for in its Article 4. It entered into force on 21 July 2011.

               The currently restricted substances as listed in Annex II to RoHS are the following: lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls (PBB), polybrominated diphenyl ethers (PBDE), bis(2‑ethylhexyl) phthalate (DEHP), butyl benzyl phthalate (BBP), dibutyl phthalate (DBP) and diisobutyl phthalate (DIBP). Annexes III and IV to RoHS list the materials and components of electrical and electronic equipment (EEE) for specific applications exempted from the substance restriction of RoHS Article 4(1).

               Article 5 provides for the adaptation to scientific and technical progress (inclusion, renewal, amendments and revoking of exemptions) of Annexes III and IV. Pursuant to Article 5(1)(a), exemptions are to be included in Annexes III and IV only if such inclusion does not weaken the environmental and health protection afforded by Regulation (EC) No 1907/2006 (REACH)
                  2
                and where any of the following conditions is fulfilled: their elimination or substitution via design changes or materials and components which do not require any of the materials or substances listed in Annex II is scientifically or technically impracticable; the reliability of substitutes is not ensured; or the total negative environmental, health and consumer safety impacts caused by substitution are likely to outweigh the total environmental, health and consumer safety benefits thereof.

               Decisions on exemptions, and their duration, are furthermore to take into account the availability of substitutes and the socioeconomic impact of substitution; and decisions on the duration of exemptions shall take into account any potential impact on innovation. Life-cycle thinking on the overall impacts of the exemption shall apply, where relevant.

               Furthermore, Article 5(1) provides that the European Commission (the Commission) shall include materials and components of EEE for specific applications in the lists in Annexes III and IV by means of individual delegated acts in accordance with Article 20. Article 5(3) and Annex V establish the procedure for submitting applications for granting, renewing, or revoking an exemption.

               2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT

               Since the publication of the RoHS Directive, the Commission has received numerous
                  3
                requests from economic operators, according to the provisions in Article 5(3) and Annex V, for both granting new and renewing existing exemptions.

               The Commission received a request for a new exemption for use of lead and hexavalent chromium compounds in electric and electronic initiators of explosives for civil (professional) use in January 2018 (request no. 2018-2).

               With a view to evaluating the application for exemption, the Commission launched a study to carry out the required technical and scientific assessment, including a seven‑week online open‑ended stakeholder consultation
                  4
                on the application. Two contributions were made to the stakeholder consultation.

               The final report containing the assessment of the application was published
                  5
               ; stakeholders were notified.

               Subsequently, the Commission consulted the Member States expert group for delegated acts under RoHS during an expert meeting on 21 October 2019. The experts agreed with the draft presented, with a large group of experts remaining silent. All necessary steps relating to exemptions from the substance restriction pursuant to Articles 5(3) to 5(7) have been performed.
                  6
                In accordance with the Better Regulation Guidelines, the draft Delegated Directive was published on the Better Regulation Portal for a four-week public feedback period. No comments were received. The Council and the European Parliament were notified of all activities.

               The final report highlighted in particular the following technical information and assessment:

               ·Electric and electronic initiators (EEI) are a part of electric and electronic detonators that are primarily used for mining of minerals (e.g. building stones, ores and precious metals) as well as for construction and demolition activities (e.g. tunnelling, demolition of chimneys and buildings). EEI are also used in components of integrated rescue systems to deal with e.g. impacts after floods, snow-caps, ice-bumps or fallen trees. Lead and hexavalent chromium compounds are contained in essential parts of the EEI, such as electric fuseheads, primary explosive charges and pyrotechnic delay charges.

               ·Currently, there are no alternatives for lead diazide, lead styphnate, lead dipicramate, orange lead (lead tetroxide), lead dioxide in EEI and for barium chromate in long time pyrotechnic delay charges of EEI available on the market which would meet all essential requirements to ensure safe operation of EEI.

               The applications concerned by the exemption request fall in category 11
                  7
               ; the exemption request therefore relates to Annex III of Directive 2011/65/EU. To ensure that the requested exemption does not weaken the environmental and health protection afforded by the REACH Regulation, in accordance with Article 5 of Directive 2011/65/EU, the relevant lead and hexavalent chromium compounds shall be specified in the wording of the exemption. Furthermore, at least one of the relevant criteria specified in Article 5(1)(a) is met by the exemption request: Since for the applications concerned, no reliable alternatives are available today or are likely to come on the market soon, granting the exemption with the maximum validity period of five years is justified. As reliable substitutes are not yet available, no negative socioeconomic impacts of substitution are to be anticipated for this period. The granted validity period is also not expected to have adverse impacts on innovation.

               3.LEGAL ELEMENTS OF THE DELEGATED ACT

               The Delegated Directive grants an exemption from the restrictions in Article 4(1), to be listed in Annex III of Directive 2011/65/EU, for the use of specific lead and hexavalent chromium compounds in specific applications.

               The instrument is a Delegated Directive, as provided for by Directive 2011/65/EU, and in particular meeting the relevant requirements of Article 5(1)(a) thereof.

               The objective of the Delegated Directive is to contribute to the protection of human health and the environment and approximate the provisions for the functioning of the internal market in the field of electrical and electronic equipment, by allowing the use of otherwise banned substances for specific applications, in line with the provisions and under the conditions of RoHS and the therein established procedure for the adaptation of the Annexes III and IV to scientific and technical progress.

               In accordance with the principle of proportionality, the measure does not go beyond what is necessary to achieve its objective.

               The delegated directive has no implications for the EU budget.

               COMMISSION DELEGATED DIRECTIVE (EU) .../…

               of 15.1.2021

               amending, for the purposes of adapting to scientific and technical progress, Annex III to Directive 2011/65/EU of the European Parliament and of the Council as regards an exemption for the use of certain lead and hexavalent chromium compounds in electric and electronic initiators of explosives for civil (professional) use

               (Text with EEA relevance)

               THE EUROPEAN COMMISSION,

               Having regard to the Treaty on the Functioning of the European Union,

               Having regard to Directive 2011/65/EU of the European Parliament and of the Council of 8 June 2011 on the restriction of the use of certain hazardous substances in electrical and electronic equipment
                  8
               , and in particular Article 5(1)(a) thereof,

               Whereas:

               (1)Directive 2011/65/EU requires Member States to ensure that electrical and electronic equipment placed on the market does not contain the hazardous substances listed in Annex II to that Directive. That restriction does not apply to certain exempted applications listed in Annex III to that Directive.

               (2)The categories of electrical and electronic equipment to which Directive 2011/65/EU applies are listed in Annex I to that Directive.

               (3)Lead and hexavalent chromium are restricted substances listed in Annex II to Directive 2011/65/EU.

               (4)On 19 January 2018, the Commission received an application made in accordance with Article 5(3) of Directive 2011/65/EU for an exemption to be listed in Annex III to that Directive, for the use of lead and hexavalent chromium compounds in electric and electronic initiators of explosives for civil (professional) use ("the requested exemption").

               (5)The evaluation of the request included stakeholder consultations in accordance with Article 5(7) of Directive 2011/65/EU. The comments received during these consultations were made publicly available on a dedicated website.

               (6)Certain lead and hexavalent chromium compounds are used in essential parts of electric and electronic initiators (EEI), such as electric fuseheads, primary explosive charges and pyrotechnic delay charges. EEI are a part of electric and electronic detonators that are primarily used for mining of minerals, construction and demolition activities, as well as in components of integrated rescue systems.

               (7)Currently, there are no alternatives for lead diazide, lead styphnate, lead dipicramate, orange lead (lead tetroxide), lead dioxide in EEI and for barium chromate in long time pyrotechnic delay charges of EEI available on the market which would meet all essential requirements in order to ensure safe operation of EEI.

               (8)Due to the lack of alternatives, a substitution or elimination of lead diazide, lead styphnate, lead dipicramate, orange lead (lead tetroxide), lead dioxide and barium chromate is scientifically and technically impracticable in certain EEI components. The exemption is consistent with Regulation (EC) No 1907/2006 of the European Parliament and of the Council
                  9
                and thus does not weaken the environmental and health protection afforded by it.

               (9)It is, therefore, appropriate to grant the requested exemption by including the applications covered by it in Annex III to Directive 2011/65/EU with respect to electrical and electronic equipment of category 11.

               (10)The requested exemption should be granted for a duration of 5 years starting from [the date of the publication of this Directive in the Official Journal], in accordance with the first subparagraph of Article 5(2) of Directive 2011/65/EU. In view of the results of the ongoing efforts to find a reliable substitution, the duration of the exemption is unlikely to have adverse impacts on innovation.

               (11)Directive 2011/65/EU should therefore be amended accordingly,

               HAS ADOPTED THIS DIRECTIVE:

               Article 1

               Annex III to Directive 2011/65/EU is amended as set out in the Annex to this Directive.

               Article 2

               1.Member States shall adopt and publish, by [the last day of the 5th month after the date of entry into force of this Directive] at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

               They shall apply those provisions from [the last day of the 5th month after the date of entry into force of this Directive + 1 day].

               When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

               2.Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

               Article 3

               This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

               Article 4

               This Directive is addressed to the Member States.

               Done at Brussels, 15.1.2021

                     For the Commission

                     The President
                     Ursula VON DER LEYEN

                     (1)

                        OJ L 174, 1.7.2011, p. 88.

                     (2)

                        OJ L 396, 30.12.2006, p. 1.

                     (3)

                        The list is given at:
                  http://ec.europa.eu/environment/waste/rohs_eee/adaptation_en.htm

                     (4)

                  Consultation period
                  : from 31 October 2018 until 19 December 2018.

                     (5)

                     https://op.europa.eu/en/publication-detail/-/publication/7e6bf135-f0b9-11e9-a32c-01aa75ed71a1/language-en/format-PDF/source-120742148

                     (6)

                        A list of the required administrative steps is available on the
                  Commission website
                  . Current stage of the procedure can be viewed for each draft delegated act in the Interinstitutional Registry of Delegated Acts at
                  https://webgate.ec.europa.eu/regdel/#/home
                  .

                     (7)

                        The categories listed in Annex I of Directive 2011/65/EU are namely: 1. Large household appliances; 2. Small household appliances; 3. IT and telecommunications equipment; 4. Consumer equipment; 5. Lighting equipment; 6. Electrical and electronic tools; 7. Toys, leisure and sports equipment; 8. Medical devices; 9. Monitoring and control instruments including industrial monitoring and control instruments; 10. Automatic dispensers; 11. Other EEE not covered by any of the categories above.

                     (8)

                        OJ L 174, 1.7.2011, p. 88.

                     (9)

                        Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC (OJ L 396, 30.12.2006, p. 1).

    ---documentbreak---

               ANNEX

               In Annex III to Directive 2011/65/EU, the following entry 45 is added:

                        "45

                        Lead diazide, lead styphnate, lead dipicramate, orange lead (lead tetroxide), lead dioxide in electric and electronic initiators of explosives for civil (professional) use and barium chromate in long time pyrotechnic delay charges of electric initiators of explosives for civil (professional) use

                        Applies to category 11 and expires on [PO: 5 years after the publication of the Delegated Directive in the Official Journal]."


title: COMMISSION DIRECTIVE (EU) .../… amending Directive 2006/126/EC of the European Parliament and of the Council on driving licences

text:
                         EUROPEAN
                         COMMISSION
                                                 Brussels, 4.5.2020
                                                 C(2020) 2665 final
                       COMMISSION DIRECTIVE (EU) .../…
                                     of 4.5.2020
   amending Directive 2006/126/EC of the European Parliament and of the Council on
                                   driving licences
                              (Text with EEA relevance)
EN                                                                                EN
 ---pagebreak---                              COMMISSION DIRECTIVE (EU) .../…
                                             of 4.5.2020
      amending Directive 2006/126/EC of the European Parliament and of the Council on
                                           driving licences
                                      (Text with EEA relevance)
   THE EUROPEAN COMMISSION,
   Having regard to the Treaty on the Functioning of the European Union,
   Having regard to Directive 2006/126/EC of the European Parliament and of the Council of 20
   December 2006 on driving licences1, and in particular Article 8 thereof,
   Whereas:
   (1)   The existing specific provisions concerning the Member States’ possibility to decide
         that no restriction to vehicles with automatic transmission shall be recorded on the
         driving licence of holders of a driving licence for vehicles of category C, CE, D and
         DE should be extended to holders of driving licences for vehicles of category BE, C1,
         C1E, D1 and D1E when the applicant already holds a driving licence obtained on a
         vehicle with manual transmission in at least one of the following categories: B, BE, C,
         CE, C1, C1E, D, DE, D1 or D1E.
   (2)   That extension should be carried out in the light of technical progress, in particular in
         order to take into account the development and increasing use, in the transport
         industry, of more modern, safer and less polluting vehicles equipped with a wide range
         of semi-automatic, automatic or hybrid transmission systems. Furthermore, the
         simplification of the existing restrictions on driving automatic vehicles would reduce
         the administrative and financial burden on stakeholders, including SMEs and micro-
         enterprises operating in the field of road transport.
   (3)   The requirements for test vehicle motorcycles of category A2 to be used during the
         test of skills and behaviour need to be adapted to technical progress, in particular to
         combustion engine and chassis development and to the wider use of electric
         motorcycles. The adaptation of the technical specifications for category A2 test
         vehicles should also ensure that applicants are tested on vehicles that are
         representative of the category for which the driving licence would be issued.
   (4)   Directive 2006/126/EC should therefore be amended accordingly.
   (5)   In accordance with the Joint Political Declaration of 28 September 2011 of Member
         States and the Commission on explanatory documents2, Member States have
         undertaken to accompany, in justified cases, the notification of their transposition
         measures with one or more documents explaining the relationship between the
   1
         OJ L 403, 30.12.2006, p. 18.
   2
         OJ C 369, 17.12.2011, p. 14.
EN                                                1                                                EN
 ---pagebreak---            components of a directive and the corresponding parts of national transposition
           instruments.
   (6)     The measures provided for in this Directive are in accordance with the opinion of the
           Committee on driving licences,
   HAS ADOPTED THIS DIRECTIVE:
                                               Article 1
   Annex II to Directive 2006/126/EC is amended in accordance with the Annex to this
   Directive.
                                               Article 2
   1.        Member States shall adopt and publish, by 1 November 2020 at the latest, the laws,
             regulations and administrative provisions necessary to comply with this Directive.
             They shall forthwith communicate to the Commission the text of those provisions.
             They shall apply those provisions from 1 November 2020.
             When Member States adopt those provisions, they shall contain a reference to this
             Directive or be accompanied by such a reference on the occasion of their official
             publication. Member States shall determine how such reference is to be made.
   2.        Member States shall communicate to the Commission the text of the main provisions
             of national law which they adopt in the field covered by this Directive.
                                               Article 3
   This Directive shall enter into force on the twentieth day following that of its publication in
   the Official Journal of the European Union.
                                               Article 4
   This Directive is addressed to the Member States.
   Done at Brussels, 4.5.2020
                                                For the Commission
                                                The President
                                                Ursula VON DER LEYEN
EN                                                 2                                               EN
 ---documentbreak---                          EUROPEAN
                         COMMISSION
                                                Brussels, 4.5.2020
                                                C(2020) 2665 final
                                                ANNEX
                                       ANNEX
                                        to the
                                Commission Directive
   amending Directive 2006/126/EC of the European Parliament and of the Council on
                                  driving licences
EN                                                                                EN
 ---pagebreak---                                                 ANNEX
   Annex II to Directive 2006/126/EC is amended as follows:
   (a)     Point 5.1.3 is replaced by the following:
           ‘5.1.3. Specific provisions concerning vehicles of category BE, C, CE, C1, C1E, D,
           DE, D1 and D1E
                  Member States may decide that no restriction to vehicles with automatic
                  transmission shall be recorded on the driving licence for a category BE, C, CE,
                  C1, C1E, D, DE, D1 or D1E vehicle referred to in point 5.1.2, when the
                  applicant already holds a driving licence obtained on a vehicle with manual
                  transmission in at least one of the following categories: B, BE, C, CE, C1,
                  C1E, D, DE, D1 or D1E, and has performed the actions described in point 8.4
                  during the test of skills and behaviour.’.
   (b)     In point 5.2, the second subparagraph of the second subtitle ‘Category A2’ is
           replaced by the following:
           ‘If the motorcycle is powered by an internal combustion engine, the cubic capacity of
           the engine shall be at least 250 cm3.’.
EN                                                 1                                              EN


title: COMMISSION DELEGATED DIRECTIVE (EU) .../… amending, for the purposes of adapting to scientific and technical progress, Annex IV to Directive 2011/65/EU of the European Parliament and of the Council as regards an exemption for the use of bis(2-ethylhexyl) phthalate (DEHP) in plastic components in magnetic resonance imaging (MRI) detector coils

text:
               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE DELEGATED ACT

               This Commission Delegated Directive amends, for the purpose of adapting to technical and scientific progress, Annex IV to Directive 2011/65/EU of the European Parliament and of the Council on the restriction of the use of certain hazardous substances in electrical and electronic equipment (recast)
                  1
                (the RoHS Directive) as regards an exemption for specific applications containing bis(2-ethylhexyl) phthalate (DEHP).

               Article 4 of the RoHS Directive restricts the use of certain hazardous substances in electrical and electronic equipment (EEE). Currently, 10 substances are restricted and listed in Annex II to the Directive: lead, mercury, cadmium, hexavalent chromium, polybrominated biphenyls (PBB), polybrominated diphenyl ethers (PBDE), bis(2‑ethylhexyl) phthalate (DEHP), butyl benzyl phthalate (BBP), dibutyl phthalate (DBP) and diisobutyl phthalate (DIBP). DEHP, BBP, DBP and DIBP were added to the list by Commission Delegated Directive (EU) 2015/863
                  2
                and will be prohibited in medical devices covered by the RoHS Directive from 22 July 2021.

               Annexes III and IV to the RoHS Directive list the materials and components of EEE for specific applications exempted from the substance restrictions in its Article 4(1). Article 5 provides for Annexes III and IV to be adapted to scientific and technical progress (as regards the granting, renewing and revoking of exemptions). Under Article 5(1)(a), exemptions are to be included in Annexes III and IV only if this does not weaken the environmental and health protection afforded by Regulation (EC) No 1907/2006 (REACH)
                  3
                and any of the following conditions is fulfilled:

               –their elimination or substitution via design changes or materials and components that do not require any of the materials or substances listed in Annex II is scientifically or technically impracticable;

               –the reliability of substitutes is not ensured;

               –the total negative environmental, health and consumer safety impacts of substitution are likely to outweigh the total environmental, health and consumer safety benefits.

               Decisions on exemptions, and their duration, are to take into account the availability of substitutes and the socio‑economic impact of substitution. Decisions on the duration of exemptions must take into account any potential impact on innovation. Life-cycle thinking on the overall impacts of the exemption must apply, where relevant.

               Article 5(1) of the RoHS Directive provides for the Commission to include materials and components of EEE for specific applications in the lists in Annexes III and IV by means of individual delegated acts pursuant to Article 20. Article 5(3) and Annex V establish the procedure for submitting exemption applications.

               2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT

               The Commission receives numerous requests
                  4
                from economic operators to grant or renew exemptions under the RoHS Directive (Article 5(3) and Annex V).

               On 12 September 2018, the Commission received an application for a new exemption for the use of DEHP in polyvinylchloride (PVC) for coil‑cable strain‑relief devices in magnetic resonance imaging (MRI) scanners. In November 2018, in order to evaluate the application for this new exemption, the Commission launched a study
                  5
                to carry out the required technical and scientific assessment. The study, which was concluded in 2020, involved an 8‑week online stakeholder consultation, during which no contributions were received. Information concerning the consultation was provided on the project website
                  6
               .

               On 2 October 2019, the Commission received a similar request for a new exemption for the use of DEHP in plastic components in MRI detector coils. Due to the similarity of the two requests and as additional information was required on the availability of substitutes and socio-economic aspects, it launched an in-depth study in November 2019, which concluded in June 2020
                  7
               .

               In an 8‑week public consultation, stakeholders were informed about new steps and information was provided on the project website
                  8
               . No contributions were received during the consultation, but MRI manufacturers other than the applicant were interviewed as part of the information-gathering exercise.

               The Commission consulted the Member States’ expert group for delegated acts under the RoHS Directive on 23 February 2021. Some experts expressed agreement with the drafts presented, with a large group remaining silent. The Commission has taken all necessary steps relating to exemptions from the substance restriction pursuant to Article 5(3) to (7)
                  9
               . It notified the Council and the European Parliament of all activities in this context.

               The technical and scientific assessment reports highlighted that:

               ·the first request concerned the use of DEHP in PVC cable strain reliefs in MRI detector coils. The second had a wider coverage and concerned the use of DEHP in flexible polymers used in plastic components in MRI detector coils. The evaluation found that a joint exemption would be appropriate;

               ·for many MRI scanners, there are currently no DEHP-free coils available. However, at least one manufacturer provides DEHP-free MRI components;

               ·the development of alternatives and substitutes will require more time to ensure appropriate and broad availability;

               ·given the present lack of sufficient appropriate alternative technologies and substitutes, not granting an exemption would probably result in a supply shortage for health services, which depend on original MRI coils. This may result in health impacts for many patients in the EU linked to the lack of relevant diagnosis and treatment facilities.

               3.LEGAL ELEMENTS OF THE DELEGATED ACT

               While DEHP in articles is restricted by entry 51 in Annex XVII to the REACH Regulation, EEE within the scope of the RoHS Directive is exempted from this restriction. The evaluation results show that granting the exemption would not weaken the environmental and health protection afforded by REACH, thereby satisfying the condition in Article 5 of the Directive.

               Furthermore, the exemption requests meet at least one of the criteria in Article 5(1)(a) of the Directive: the reliability of substitutes is not sufficiently ensured and the total negative environmental, health and consumer safety impacts of substitution are likely to outweigh the total environmental, health and consumer safety benefits.

               In view of the manufacturers’ ongoing efforts to find a reliable and widely available alternative, the duration of the exemption until 1 January 2024, as requested is unlikely to have adverse impacts on innovation. Therefore, the exemption should be granted for the requested duration.

               The proposed act grants an exemption from the substance restrictions in Annex II to the RoHS Directive, to be listed in its Annex IV (on exemptions specific to medical devices and monitoring and control instruments), for the use of DEHP in specific applications.

               The instrument is a delegated directive, as provided for in the RoHS Directive and meeting the relevant requirements of its Article 5(1)(a).

               The objective of the delegated directive is to contribute to the protection of human health and the environment, and harmonise the provisions for the functioning of the internal market in the field of EEE, by allowing the use of otherwise banned substances for specific applications, in line with the RoHS Directive and the procedure established therein for the adaptation to scientific and technical progress of its Annexes III and IV.

               The delegated directive has no implications for the EU budget.

               COMMISSION DELEGATED DIRECTIVE (EU) .../…

               of 11.8.2021

               amending, for the purposes of adapting to scientific and technical progress, Annex IV to Directive 2011/65/EU of the European Parliament and of the Council as regards an exemption for the use of bis(2-ethylhexyl) phthalate (DEHP) in plastic components in magnetic resonance imaging (MRI) detector coils

               (Text with EEA relevance)

               THE EUROPEAN COMMISSION,

               Having regard to the Treaty on the Functioning of the European Union,

               Having regard to Directive 2011/65/EU of the European Parliament and of the Council of 8 June 2011 on the restriction of the use of certain hazardous substances in electrical and electronic equipment
                  10
               , and in particular Article 5(1), point (a), thereof,

               Whereas:

               (1)Directive 2011/65/EU requires Member States to ensure that electrical and electronic equipment placed on the market does not contain the hazardous substances listed in Annex II to the Directive. That restriction does not apply to certain exempted applications listed in Annex IV to the Directive.

               (2)The categories of electrical and electronic equipment to which Directive 2011/65/EU applies are listed in its Annex I.

               (3)Bis(2-ethylhexyl) phthalate (DEHP) is a restricted substance listed in Annex II to Directive 2011/65/EU, as amended by Commission Delegated Directive (EU) 2015/863
                  11
               . DEHP is not to be used, from 22 July 2021, in medical devices, including in vitro medical devices above a maximum concentration value of 0,1% tolerated by weight in homogeneous materials.

               (4)On 12 September 2018 and 2 October 2019, the Commission received applications made in accordance with Article 5(3) of Directive 2011/65/EU for an exemption to be listed in Annex IV to that Directive, for the use of DEHP in plastic components in magnetic resonance imaging (MRI) detector coils (‘the requested exemption’)

               (5)Two technical and scientific assessment studies were carried out to evaluate the exemption applications. The first study
                  12
                covered the first application received. Due to the similarity of the second application to the first, the second study
                  13
                evaluated both applications together. The evaluation of the applications, which took into account the availability of technically practicable and reliable substitutes and the socioeconomic impact of substitution, concluded that no suitable alternatives to DEHP are sufficiently available on the market and that not granting the exemption is likely to result in total negative environmental, health and consumer safety impacts caused by substitution, which outweigh the benefits thereof. The evaluation included stakeholder consultations as required by Article 5(7) of Directive 2011/65/EU. The comments received during those consultations were made publicly available on a dedicated website.

               (6)The requested exemption is consistent with Regulation (EC) No 1907/2006 of the European Parliament and of the Council
                  14
                and thus does not weaken the environmental and health protection afforded by it.

               (7)It is, therefore, appropriate to grant the requested exemption by including the applications covered by it in Annex IV to Directive 2011/65/EU.

               (8)To ensure that compatible plastic components for MRI coil detectors for health services are widely available on the Union market and to allow time for the development of suitable and widely available alternatives, the requested exemption should be granted until 1 January 2024, in accordance with Article 5(2), first subparagraph, of Directive 2011/65/EU. In view of the results of the ongoing efforts to find a reliable substitution, the duration of the exemption is unlikely to have adverse impacts on innovation.

               (9)Directive 2011/65/EU should therefore be amended accordingly.

               (10)In the interest of legal certainty and in order to protect the legitimate expectations of operators supplying the medical devices concerned that the requested exemption applies by the date of entry into force of the prohibition for the use of the restricted substance in question, and in the absence of any legitimate interest in creating a disruption to the supply of those medical devices as a result of the entry into force of that prohibition, this Directive should enter into force as a matter of urgency and should apply with retroactive effect from 21 July 2021,

               HAS ADOPTED THIS DIRECTIVE:

               Article 1

               Annex IV to Directive 2011/65/EU is amended as set out in the Annex to this Directive.

               Article 2

               1.Member States shall adopt and publish, by [the last day of the 5th month after the date of entry into force of this Directive] at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall communicate the text of those provisions to the Commission forthwith.

               They shall apply those provisions from 21 July 2021.

               When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

               2.Member States shall communicate to the Commission the text of the main provisions of national law that they adopt in the field covered by this Directive.

               Article 3

               This Directive shall enter into force on the day of its publication in the Official Journal of the European Union.

               Article 4

               This Directive is addressed to the Member States.

               Done at Brussels, 11.8.2021

                     For the Commission

                     The President
                     Ursula VON DER LEYEN

                     (1)

                        OJ L 174, 1.7.2011, p. 88.

                     (2)

                        OJ L 137, 4.6.2015, p. 10.

                     (3)

                        Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and establishing a European Chemicals Agency (OJ L 396, 30.12.2006, p. 1).

                     (4)

                  http://ec.europa.eu/environment/waste/rohs_eee/adaptation_en.htm

                     (5)

                        For the final report of the study (Pack 17), see:
                  https://op.europa.eu/en/publication-detail/-/publication/df0ab036-8b52-11ea-812f-01aa75ed71a1/language-en/format-PDF/source-146143357

                     (6)

                        Consultation period: 18 March to 17 May 2019;
                  https://rohs.exemptions.oeko.info/

                     (7)

                        For the final report of the study (Pack 20), see:
                  https://op.europa.eu/en/publication-detail/-/publication/185e9d5b-d5fc-11ea-adf7-01aa75ed71a1/language-en/format-PDF/source-146144567

                     (8)

                        Consultation period: 10 January to 20 February 2020;
                  https://rohs.exemptions.oeko.info/

                     (9)

                        A list of the required administrative steps is available on the
                  Commission website
                  . The current stage of the procedure can be viewed for each draft delegated act in the Interinstitutional Registry of Delegated Acts at
                  https://webgate.ec.europa.eu/regdel/#/home

                     (10)

                        OJ L 174, 1.7.2011, p. 88.

                     (11)

                        Commission Delegated Directive (EU) 2015/863 of 31 March 2015 amending Annex II to Directive 2011/65/EU of the European Parliament and of the Council as regards the list of restricted substances (OJ L 137, 4.6.2015, p. 10).

                     (12)

                        For the final report of the study (Pack 17), see:
                  https://op.europa.eu/en/publication-detail/-/publication/df0ab036-8b52-11ea-812f-01aa75ed71a1/language-en/format-PDF/source-146143357
                  .

                     (13)

                        For the final report of the study (Pack 20), see:
                  https://op.europa.eu/en/publication-detail/-/publication/185e9d5b-d5fc-11ea-adf7-01aa75ed71a1/language-en/format-PDF/source-146144567
                  .

                     (14)

                        Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending Directive 1999/45/EC and repealing Council Regulation (EEC) No 793/93 and Commission Regulation (EC) No 1488/94 as well as Council Directive 76/769/EEC and Commission Directives 91/155/EEC, 93/67/EEC, 93/105/EC and 2000/21/EC (OJ L 396, 30.12.2006, p. 1).

    ---documentbreak---

               ANNEX

               In Annex IV to Directive 2011/65/EU, the following entry 46 is added:

                        ‘46

                        Bis(2-ethylhexyl) phthalate (DEHP) in plastic components in MRI detector coils.

                        Expires on 1 January 2024.’


title: COMMISSION DELEGATED DIRECTIVE (EU) .../… amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities (UCITS)

text:
               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE DELEGATED ACT

               This Directive is part of a broader Commission's initiative on sustainable development. It lays the foundation for an EU framework which puts sustainability considerations at the heart of the financial system to support transforming Europe's economy into a greener, more resilient and circular system in line with the European Green Deal
                  1
                objectives.

               Following the adoption of 2016 Paris agreement on climate change and the United Nations 2030 Agenda for Sustainable Development Goals (SDGs), the Commission announced in the Action Plan: Financing Sustainable Growth
                  2
                the intention to clarify the integration of sustainability in so-called fiduciary duties in sectoral legislation. The European Green Deal Communication confirms the need for long-term signals to direct financial and capital flows to green investment and to avoid stranded assets. This Delegated Directive will contribute to this specific objective.

               Commission Directive 2010/43/EU
                  3
                implements Directive 2009/65/EC
                  4
                by further specifying among other things organisational requirements, identification of the types of conflicts of interest, conduct of business and risk management for UCITS management companies. This Directive modifies Commission Directive 2010/43/EU. It clarifies requirements for management companies as regards the integration of sustainability risks and sustainability matters.

               This Directive is based on a Final Report on technical advice
                  5
                by the European Securities and Markets Authority (ESMA). The technical advice concludes that further clarifications are needed in respect of the integration of sustainability risks and sustainability factors in Directive 2010/43/EU and identifies specific provisions in this respect.

               This Directive clarifies the current obligation of undertakings for collective investment in transferable securities (UCITS) to integrate sustainability risks. The clarification does not introduce ranking amongst different risks. This Directive also clarifies some of implications of Regulation on sustainability-related disclosures in the financial services sector, namely where management companies of UCITS disclose information with regard to the consideration of adverse sustainability impacts.

               This Directive and other sectoral delegated acts that adapt rules on fiduciary duties and suitability test further reinforce Regulation on sustainability-related disclosures in the financial services sector,
                  6
                Regulation on the EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks
                  7
                 and Regulation on the EU taxonomy for sustainable activities
                  8
               . These rules integrate sustainability considerations into the investment, advisory and disclosure processes in a consistent manner across sectors. They anchor environmental, social and governance (sustainability) considerations at the heart of the financial system to help transform Europe's economy into a greener, low-carbon, more resilient, resource-efficient and circular system.

               2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT

               On 24 July 2018, the Commission requested ESMA to issue technical advice on potential amendments to delegated acts to be adopted under Directive 2009/65/EC, with regard to the integration of sustainability risks and sustainability factors.

               ESMA published its Final Report on technical advice to the Commission on 30 April 2019. The advice took into account the views expressed by stakeholders during the public consultation between 19 December 2018 and 19 February 2019. It includes a cost-benefit analysis. In addition, ESMA carried out an open public hearing on 4 February 2019 in order to gather additional feedback. The Securities and Markets Stakeholder Group of ESMA was also consulted.

               On 22 November 2019, the Commission services initiated the consultation of the Member States; the Expert Group of the European Securities Committee was duly consulted.

               In line with the Better Regulation Principles, draft proposal was published for consultation from 8 June 2020 to 6 July 2020. After due consideration of the feedback further modifications were introduced into the text of the explanatory memorandum.

               3.LEGAL ELEMENTS OF THE DELEGATED ACT

               The legal basis for this Directive is set out in Articles 12(3), 14(2) and 51(4) of Directive 2009/65/EC.

               This Directive covers the following amendments to Directive 2010/43/EU:

               Article 1(1) lays down a definition of ‘sustainability risks’ that is aligned with the definition of ‘sustainability risks’ in point (22) of Article 2 of Regulation (EU) 2019/2088.

               Article 1(2) integrates in the first subparagraph Article 4(1) of Directive 2010/43/EU on general requirements on procedures and organisation the obligation addressed to management companies to consider sustainability risks.

               Article 1(3) requires management companies to retain the necessary resources and expertise for the effective integration of sustainability risks, by amending Article 5 of Directive 2010/43/EU.

               Article 1(4) sets out investment companies integrate sustainability risks, taking into account the principle of proportionality.

               Article 1(5) ensures that senior management of the management company is responsible for the integration of sustainability risks.

               Article 1(6) lays down that the identification of conflicts of interest must also include those types that may arise as a result of the integration of sustainability risks.

               Article 1(7) includes the consideration of sustainability risks either in qualitative or quantitative terms in due diligence requirements under Article 23 of Directive 2010/43/EU. Where management companies, or, where applicable, investment companies, consider principal adverse impacts of investment decisions on sustainability factors, due diligence requirements must also take due account of them.

               Article 1(8) clarifies that the risk management policy under Article 38 of Directive 2010/43/EU must also consider exposures of UCITS to sustainability risks.

               COMMISSION DELEGATED DIRECTIVE (EU) .../…

               of 21.4.2021

               amending Directive 2010/43/EU as regards the sustainability risks and sustainability factors to be taken into account for Undertakings for Collective Investment in Transferable Securities (UCITS)

               (Text with EEA relevance)

               THE EUROPEAN COMMISSION,

               Having regard to the Treaty on the Functioning of the European Union,

               Having regard to Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS)
                  9
               , and in particular Article 12(3), Article 14(2), and Article 51(4) thereof,

               Whereas:

               (1)The transition to a low-carbon, more sustainable, resource-efficient and circular economy in line with the Sustainable Development Goals is key to ensuring the long-term competitiveness of the economy of the Union. In 2016, the Union concluded the Paris Agreement
                  10
               . Article 2(1), point (c) of the Paris Agreement sets out the objective of strengthening the response to climate change by, among other means making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

               (2)Recognising that challenge, the Commission presented the European Green Deal
                  11
                in December 2019. That Green Deal represents a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy where there are no net greenhouse gas emissions from 2050 onwards and where economic growth is decoupled from resource use. That objective requires that clear signals are given to investors with regard to their investments to avoid stranded assets and to raise sustainable finance.

               (3)In March 2018, the Commission published its Action Plan ‘Financing Sustainable Growth’
                  12
               , setting up an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in the Action Plan is to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth. The impact assessment underpinning subsequent legislative initiatives published in May 2018
                  13
                demonstrated the need to clarify that sustainability factors should be taken into account by management companies as part of their duties towards investors. Management companies should therefore assess not only all relevant financial risks on an ongoing basis, but also all relevant sustainability risks as referred to in Regulation (EU) 2019/2088 that, where they occur, could cause an actual or potential material negative impact on the value of an investment. Commission Directive 2010/43/EU
                  14
                does not explicitly refer to sustainability risks. For that reason and to ensure that internal procedures and organisational arrangements are properly implemented and adhered to, it is necessary to clarify that processes, systems and internal controls of management companies reflect sustainability risks, and that technical capacity and knowledge is necessary to analyse those risks.

               (4)To avoid an uneven playing field for management companies, and investment companies that have not designated a management company, and to avoid related fragmentation, inconsistency and unpredictability in the functioning of the internal market, the rules regarding the integration of sustainability risks should also apply to investment companies, taking into account the principle of proportionality.

               (5)To maintain a high standard of investor protection, management companies should, when identifying the types of conflicts of interest the existence of which may damage the interests of a UCITS, include conflicts of interest that may arise as a result of the integration of sustainability risks in their processes, systems and internal controls. Those conflicts may include conflicts arising from remuneration or personal transactions of relevant staff, conflicts of interest that could give rise to greenwashing, mis-selling or misrepresentation of investment strategies and conflicts of interests between different UCITS managed by the same management company.

               (6)Pursuant to Regulation (EU) 2019/2088 management or investment companies that are obliged to consider principal adverse impacts of investment decisions on sustainability factors, or consider those principal adverse impacts voluntarily, are obliged to disclose how their due diligence policies take those principal adverse impacts into account. To ensure consistency between Regulation (EU) 2019/2088 and Directive 2010/43/EU, that obligation should be reflected in Directive 2010/43/EU.

               (7)Directive 2010/43/EU should therefore be amended accordingly,

               HAS ADOPTED THIS DIRECTIVE:

               Article 1

               Amendments to Directive 2010/43/EU

               Directive 2010/43/EU is amended as follows:

               (1)in Article 3, the following points 11 and 12 are added:

               “11.
                     ‘sustainability risk’ means sustainability risk as defined in Article 2, point (22), of Regulation (EU) 2019/2088 of the European Parliament and of the Council*;

               12
                     ‘sustainability factors’ means sustainability factors as defined in Article 2, point (24), of Regulation (EU) 2019/2088.

               _________________________________________________________________________

               *
                     Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).”;

               (2)in Article 4(1), the following subparagraph is added:

               “Member States shall ensure that management companies take into account sustainability risks when complying with the requirements laid down in the first subparagraph.”;

               (3)in Article 5, the following paragraph 5 is added:

               “5.
                     Member States shall ensure that for the purposes laid down in paragraphs 1, 2 and 3, management companies retain the necessary resources and expertise for the effective integration of sustainability risks.”;

               (4)the following Article 5a is inserted:

               “Article 5a

               Obligation for investment companies to integrate sustainability risks in the management of UCITS

               Member States shall ensure that investment companies integrate sustainability risks in the management of UCITS, taking into account the nature, scale and complexity of the business of the investment companies.”;

               (5)in Article 9(2), the following point (g) is added:

               “(g)
                     is responsible for the integration of sustainability risks in the activities referred to in points (a) to (f).”;

               (6)in Article 17, the following paragraph 3 is added:

               “3.
                     Member States shall ensure that,  when management companies identify the types of conflicts of interest the existence of which may damage the interests of a UCITS, those management companies include those types of conflicts of interest that may arise as a result of the integration of sustainability risks in their processes, systems and internal controls.”;

               (7)in Article 23, the following paragraphs 5 and 6 are added:

               “5.
                     Member States shall require that management companies take into account sustainability risks when complying with the requirements set out in paragraphs 1 to 4.

               6.
                     Member States shall ensure that where management companies, or, where applicable, investment companies, consider principal adverse impacts of investment decisions on sustainability factors as described in Article 4(1), point (a), of Regulation (EU) 2019/2088, or as required by paragraphs 3 or 4 of Article 4 of that Regulation, those management companies or investment companies take into account such principal adverse impacts when complying with the requirements set out in paragraphs 1 to 4 of this Article.”;

               (8)in Article 38(1), the second subparagraph is replaced by the following:

               “The risk management policy shall comprise such procedures as are necessary to enable the management company to assess for each UCITS it manages the exposure of that UCITS to market, liquidity, sustainability and counterparty risks, and the exposure of the UCITS to all other risks, including operational risks, which may be material for each UCITS it manages.”.

               Article 2

               Transposition

               1.Member States shall adopt and publish, by [PO: Please insert a date – last day of the eleventh month after publication in the Official Journal of the European Union] at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

               They shall apply those measures from [PO: Please insert a date – first day of the twelfth month after publication in the Official Journal of the European Union].

               When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

               2.Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

               Article 3

               Entry into force

               This Directive shall enter into force on the on the twentieth day following that of its publication in the Official Journal of the European Union.

               Article 4

               Addressees

               This Directive is addressed to the Member States.

               Done at Brussels, 21.4.2021

                     For the Commission

                     The President
                     Ursula VON DER LEYEN

                     (1)

                        Communication from the Commission to the European Parliament, to the European Council, the Council, the European Economic and Social Committee, and the Committee of the Regions: the European Green Deal (COM(2019)640 final)

                     (2)

                        Communication from the Commission to the European Parliament, to the European Council, the Council, The European Central Bank, the European Economic and Social Committee, and the Committee of the Regions Action Plan: Financing Sustainable Growth (COM(2018)097 final).

                     (3)

                        Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company (OJ L 176, 10.7.2010, p. 42).

                     (4)

                        Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302 17.11.2009, p. 32).

                     (5)

                        Final Report - ESMA’s technical advice to the European Commission on integrating sustainability risks and factors in the UCITS Directive and AIFMD (ESMA34-45-688).

                     (6)

                        Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).

                     (7)

                        Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks (OJ L 317, 9.12.2019, p. 17).

                     (8)

                        Regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment (not yet published).

                     (9)

                        OJ L 302, 17.11.2009, p. 32.

                     (10)

                        Council Decision (EU) 2016/1841 of 5 October 2016 on the conclusion, on behalf of the European Union, of the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (OJ L 282, 19.10.2016, p. 4).

                     (11)

                        COM(2019) 640 final.

                     (12)

                        COM(2018) 97 final.

                     (13)

                        SWD(2018) 264 final.

                     (14)

                        Commission Directive 2010/43/EU of 1 July 2010 implementing Directive 2009/65/EC of the European Parliament and of the Council as regards organisational requirements, conflicts of interest, conduct of business, risk management and content of the agreement between a depositary and a management company (OJ L 176, 10.7.2010, p. 42).


title: COMMISSION DELEGATED DIRECTIVE (EU) .../… amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations

text:
               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE DELEGATED ACT

               This Directive is part of a broader Commission's initiative on sustainable development. It lays the foundation for an EU framework which puts sustainability considerations at the heart of the financial system to support transforming Europe's economy into a greener, more resilient and circular system in line with the European Green Deal
                  1
                objectives.

               Following the adoption of 2016 Paris agreement on climate change and the United Nations 2030 Agenda for Sustainable Development Goals (SDGs), the Commission announced in the Action Plan: Financing Sustainable Growth
                  2
                the intention to clarify the integration of sustainability in so-called fiduciary duties in sectoral legislation. The European Green Deal Communication confirms the need for long-term signals to direct financial and capital flows to green investment and to avoid stranded assets. This Delegated Directivewill contribute to this specific objective.

               Commission Delegated Directive (EU) 2017/593
                  3
                supplements Directive 2014/65/EU of the European Parliament and of the Council
                  4
                (MiFID II) by further specifying, among other things, product governance obligations. This Directive modifies Commission Delegated Directive (EU) 2017/593
                  5
                in two ways:

               Under the existing MiFID II framework, an investment firm which manufactures financial instruments for sale to clients shall maintain, operate and review a process for the approval of each financial instrument and significant adaptations of existing financial instruments before it is marketed or distributed to clients. The product approval process shall specify an identified target market of end clients within the relevant category of clients for each financial instrument and shall ensure that all relevant risks to such identified target market are assessed and that the intended distribution strategy is consistent with the identified target market.
                  6
                Further, Article 24(2) MiFID II  requires investment firms which manufacture financial instruments for sale to clients to ensure that those financial instruments are designed to meet the needs of an identified target market of end clients within the relevant category of clients, the strategy for distribution of the financial instruments is compatible with the identified target market, and the investment firm takes reasonable steps to ensure that the financial instrument is distributed to the identified target market. Chapter III of Delegated Directive (EU) 2017/593 lays down further details on the product oversight and governance process for both manufactures and distributors.

               The conditions to identify a target market in Delegated Directive 2017/593 adopted under Articles 16(12) and 24(13) of MiFID II did not yet explicitly establish the details of the integration of sustainability factors and sustainability-related objectives by investment firms manufacturing financial instruments and their distributors. This Directive clarifies that sustainability factors and sustainability related objectives should be taken into account in the product oversight and governance process.

               This Directive and other sectoral delegated acts that adapt rules on fiduciary duties and that were adopted alongside also reinforce Regulation (EU) 2019/2088 of the European Parliament and of the Council
                  7
               , Regulation (EU) 2019/2089 of the European Parliament and of the Council
                  8
                and Regulation (EU) 2020/852 of the European Parliament and of the Council
                  9
               . Those rules integrate sustainability considerations into the investment, advisory and disclosure processes in a consistent manner across sectors. They anchor environmental, social and governance (sustainability) considerations at the heart of the financial system to help transform Europe's economy into a greener, low-carbon, more resilient, resource-efficient and circular system.

               This draft Delegated Directive is based on the empowerment set out in Articles 16(3) and 24(13) of MiFID II.

               2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT

               In December 2016, the Commission set up a High-Level Expert Group on Sustainable Finance (HLEG) to help develop an Union strategy on Sustainable Finance through recommendations. The HLEG published an interim report on "Financing a Sustainable European Economy" in mid-July 2017 and presented its final report at a stakeholder event on 18 July 2017, followed by a consultation questionnaire.

               A feedback statement that was published along with the HLEG final report on Financing a Sustainable European Economy on 31 January 2018 summarises the respondents’ answers. In its final report, the HLEG recommends to "require investment advisers to ask about, and then respond to, retail investors’ preferences about the sustainable impact of their investments, as a routine component of financial advice". It also recommended to “discuss the governance of addressing long-term and sustainability risks”.

               In March 2018, the Commission sent a targeted questionnaire on the integration of environmental, social and governance considerations in the suitability assessment. The consultation showed that only a minority of the clients proactively raise sustainability issues during the advisory process. Some of the reasons for this are: i) the available information on sustainability-related financial instruments is not transparent; ii) the risk of 'greenwashing' in existing documentation is high; and iii) there is a lack of education on its impact on risk and performance. Only in rare cases, clients seem to systematically raise interest in sustainability factors during the advisory process.

               The Commission requested ESMA to issue a technical advice on potential amendments to delegated acts to be adopted under the MiFID II  with regard to the integration of sustainability risks and sustainability factors in the areas of organisational requirements, operating conditions, risk management and target market assessment.

               In its mandate, the Commission highlighted that changes to the definition of the target market shall not lead to miss-selling practices, e.g. by clearly identifying investment objectives and sustainability constraints. In addition, the Commission reaffirmed that the possibility to identify a target market for clients without sustainability related objectives should be maintained.

               On 30 April 2019, ESMA published its “Final report on integrating sustainability risks and factors in MiFID II”. The advice took into account the views expressed by stakeholders during the public consultation between 19 December 2018 and 19 February 2019. It includes a cost-benefit analysis. In addition, ESMA carried out an open public hearing on 4 February 2019 in order to gather additional feedback. The Securities and Markets Stakeholder Group of ESMA was also consulted. This report addresses the inclusion of sustainability risks and factors into the organisational requirements and product governance and oversight structures of investment firms. The recommendations on product governance and oversight structures prepared and publicly consulted by ESMA were integrated into this draft Delegated Directive.

               In line with its Better Regulation Principles, this draft proposal was published for consultation from 8 June 2020 to 6 July 2020. After due consideration of the feedback further modifications were introduced into the text.

               3.LEGAL ELEMENTS OF THE DELEGATED ACT

               The legal basis for this Directive is set out in Article 16(12) and Article 24(13) of Directive 2014/65/EU.

               This draft Delegated Directive covers the following amendments to Delegated Directive (EU) 2017/593:

               Article 1 aims at clarifying that manufacturers should duly consider sustainability related objectives when specifying the type(s) of client for whose needs, characteristics and objectives the financial instrument is compatible with. Further, the target market assessment in consideration of the respective product's risk/reward profile and product features should also cover the instrument's objective of sustainable investments or environmental or social characteristics. In the context of this review, manufacturers should also explicitly take clients’ sustainability related objectives into account.

               Further, manufacturers should disclose sustainability factors of the financial instruments in a transparent way that allows investment firms to engage in dialogues with clients or potential clients in order to have sufficiently granular understanding of the clients’ individual sustainability preferences, pursuant to Commission Delegated Regulation (EU) 2017/565
                  10
               . For sustainable investments, the identification of a negative target market will not be required.

               Article 2 echoes those requirements for the distributors.

               Finally, Article 3 sets out the date of application of the proposed Directive, including the transitional period of 12 months.

               COMMISSION DELEGATED DIRECTIVE (EU) .../…

               of 21.4.2021

               amending Delegated Directive (EU) 2017/593 as regards the integration of sustainability factors into the product governance obligations

               (Text with EEA relevance)

               THE EUROPEAN COMMISSION,

               Having regard to the Treaty on the Functioning of the European Union,

               Having regard to Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU
                  11
               , and in particular Article 16(12) and Article 24(13) thereof,

               Whereas:

               (1)The transition to a low-carbon, more sustainable, resource-efficient and circular economy in line with the Sustainable Development Goals is key to ensuring the long-term competitiveness of the economy of the Union. In 2016, the Union concluded the Paris Agreement
                  12
               . Article 2(1), point (c), of the Paris Agreement sets out the objective of strengthening the response to climate change by, among others means, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.

               (2)Recognising that challenge, the Commission presented the European Green Deal
                  13
                in December 2019. The Green Deal represents a new growth strategy that aims to transform the Union into a fair and prosperous society with a modern, resource-efficient and competitive economy where there are no net greenhouse gas emissions from 2050 onwards and where economic growth is decoupled from resource use. That objective requires that clear signals are given to investors with regard to their investments to avoid stranded assets and to raise sustainable finance.

               (3)In March 2018, the Commission published its Action Plan ‘Financing Sustainable Growth’
                  14
               , setting up an ambitious and comprehensive strategy on sustainable finance. One of the objectives set out in the Action Plan is to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth.

               (4)Proper implementation of the Action plan encourages investors’ demand for sustainable investments. It is therefore necessary to clarify that sustainability factors, and sustainability related objectives should be considered within the product governance requirements set out in Commission Delegated Directive (EU) 2017/593
                  15
               .

               (5)Investment firms manufacturing and distributing financial instruments should consider sustainability factors in the product approval process of each financial instrument and in the other product governance and oversight arrangements for each financial instrument that is intended to be distributed to clients seeking financial instruments with a sustainability-related profile.

               (6)Considering that the target market should be set at a sufficient granular level, a general statement that a financial instrument has a sustainability-related profile should not be sufficient. Investment firms manufacturing and distributing financial instruments should rather specify to which group of clients with sustainability related objectives the financial instrument is supposed to be distributed.

               (7)To ensure that financial instruments with sustainability factors remain easily available also for clients that do not have sustainability preferences, investment firms should not be required to identify groups of clients with whose needs, characteristics and objectives the financial instrument with sustainability factors is not compatible.

               (8)The sustainability factors of a financial instrument should be presented in a transparent manner to enable the distributor to provide the relevant information to its clients or potential clients.

               (9)Delegated Directive (EU) 2017/593 should therefore be amended accordingly,

               HAS ADOPTED THIS DIRECTIVE:

               Article 1
               Amendments to Delegated Directive (EU) 2017/593

               Delegated Directive (EU) 2017/593 is amended as follows:

               (1)in Article 1, the following paragraph 5 is added:

               “5.
                     ‘sustainability factors’ means sustainability factors as defined in Article 2, point (24), of Regulation (EU) 2019/2088*.

               _______________________________________________________________

               *Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).”;

               (2)Article 9 is amended as follows:

               (a)in paragraph 9, the first subparagraph is replaced by the following:

               “9.
                     Member States shall require investment firms to identify at a sufficiently granular level the potential target market for each financial instrument and specify the type(s) of client with whose needs, characteristics and objectives, including any sustainability related objectives, the financial instrument is compatible. As part of this process, the firm shall identify any group(s) of clients with whose needs, characteristics and objectives the financial instrument is not compatible, except where financial instruments consider sustainability factors. Where investment firms collaborate to manufacture a financial instrument, only one target market needs to be identified.”;

               (b)paragraph 11 is replaced by the following:

               “11.
                     Member States shall require investment firms to determine whether a financial instrument meets the identified needs, characteristics and objectives of the target market, including by examining the following elements:

               (a)the financial instrument's risk/reward profile is consistent with the target market;

               (b)the financial instrument's sustainability factors, where relevant, are consistent with the target market;

               (c)the financial instrument design is driven by features that benefit the client and not by a business model that relies on poor client outcomes to be profitable.”;

               (c)in paragraph 13, the following second subparagraph is added:

               “The sustainability factors of the financial instrument shall be presented in a transparent manner and provide distributers with the relevant information to duly consider any sustainability related objectives of the client or potential client.”;

               (d)paragraph14 is replaced by the following:

               “14.
                     Member States shall require investment firms to review the financial instruments they manufacture on a regular basis, taking into account any event that could materially affect the potential risk to the identified target market. Investment firms shall consider whether the financial instrument remains consistent with the needs, characteristics and objectives, including any sustainability related objectives, of the target market and if it is distributed to the target market, or reaches clients with whose needs, characteristics and objectives the financial instrument is not compatible.”;

               (3)Article 10 is amended as follows:

               (a)in paragraph 2, the first subparagraph is replaced by the following:

               “2.
                     Member States shall require investment firms to have in place adequate product governance arrangements to ensure that products and services they intend to offer or recommend are compatible with the needs, characteristics, and objectives, including any sustainability related objectives, of an identified target market and that the intended distribution strategy is consistent with the identified target market. Investment firms shall appropriately identify and assess the circumstances and needs of the clients they intend to focus on, so as to ensure that clients' interests are not compromised as a result of commercial or funding pressures. As part of this process, investment firms shall identify any group of clients with whose needs, characteristics and objectives the product or service is not compatible except where financial instruments consider sustainability factors.”;

               (b)paragraph 5 is replaced by the following:

               “5.
                     Member States shall require investment firms to review the investment products they offer or recommend and the services they provide on a regular basis, taking into account any event that could materially affect the potential risk to the identified target market. Firms shall assess at least whether the product or service remains consistent with the needs, characteristics and objectives, including any sustainability related objectives, of the identified target market and whether the intended distribution strategy remains appropriate. Firms shall reconsider the target market and/or update the product governance arrangements if they become aware that they have wrongly identified the target market for a specific product or service or that the product or service no longer meets the circumstances of the identified target market, such as where the product becomes illiquid or very volatile due to market changes.”.

               Article 2
               Transposition

               1.Member States shall adopt and publish, by [OJ: please insert date - exactly 12 months minus one day after entry into force of this delegated act] at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

               They shall apply those provisions from [OJ: please insert date exactly 15 months after entry into force of this delegated act].

               When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

               2.Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

               Article 3
               Entry into force

               This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

               Article 4
               Addressees

               This Directive is addressed to the Member States.

               Done at Brussels, 21.4.2021

                     For the Commission

                     The President
                     Ursula VON DER LEYEN

                     (1)

                        Communication from the Commission to the European Parliament, to the European Council, the Council, the European Economic and Social Committee, and the Committee of the Regions: the European Green Deal [COM(2019)640 final].

                     (2)

                        Communication from the Commission to the European Parliament, to the European Council, the Council, The European Central Bank, the European Economic and Social Committee, and the Committee of the Regions Action Plan: Financing Sustainable Growth [COM(2018)097 final].

                     (3)

                        Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (OJ L 87, 31.3.2017, p. 500).

                     (4)

                        Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (OJ L 173, 12.6.2014, p. 349).

                     (5)

                        Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (OJ L 87, 31.3.2017, p. 500).

                     (6)

                        See Article 16(3) MiFID, but also Art. 9(3)of MiFID.

                     (7)

                        Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).

                     (8)

                        Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks (OJ L 317, 9.12.2019, p. 17).

                     (9)

                        Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ L 198, 22.6.2020, p. 13).

                     (10)

                        Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive (OJ L 87, 31.3.2017, p. 1).

                     (11)

                        OJ L 173, 12.6.2014, p. 349.

                     (12)

                        Council Decision (EU) 2016/1841 of 5 October 2016 on the conclusion, on behalf of the European Union, of the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (OJ L 282, 19.10.2016, p. 1).

                     (13)

                        COM(2019) 640 final.

                     (14)

                        COM(2018) 97 final.

                     (15)

                        Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits (OJ L 87, 31.3.2017, p. 500).


title: COMMISSION DELEGATED DIRECTIVE (EU) .../… amending Annex III to Directive 2014/90/EU of the European Parliament and of the Council on marine equipment as regards the applicable standard for laboratories used by conformity assessment bodies for marine equipment

text:
               EXPLANATORY MEMORANDUM

               1.CONTEXT OF THE DELEGATED ACT

               Directive 2014/90/EU of the European Parliament and of the Council of 23 July 2014 on marine equipment and repealing Council Directive 96/98/EC (hereafter called ‘the Directive’) provides that “The Commission shall be empowered to adopt delegated acts in accordance with Article 37 in order to update the references to standards, as referred to in Annex III, when new standards become available”.

               Annex III of the Directive requires conformity assessment bodies acting as notified bodies for marine equipment to ensure that testing laboratories used for conformity assessment purposes meet the requirements of standard EN ISO/IEC 17025.

               EN ISO/IEC 17025 enables laboratories to demonstrate that they operate competently and generate valid results, thereby promoting confidence in their work.

               The last version of EN ISO/IEC 17025 was published in 2005 and, since then, market conditions and technology have changed. Therefore a new version of the standard was published by the International Standardisation Organization (ISO) and the International Electrotechnical Commission (IEC) in 2017.

               According to ISO, the most substantive changes are as follows :

               ·The scope has been revised to cover all laboratory activities, including testing, calibration and the sampling associated with subsequent calibration and testing.

               ·A new structure has been adopted to align the standard with the other existing ISO/IEC conformity assessment standards such as the ISO/IEC 17000 series on conformity assessment.

               ·The process approach now matches that of newer standards such as ISO 9001 (quality management), ISO 15189 (quality of medical laboratories) and the ISO/IEC 17000 series (standards for conformity assessment activities), putting the emphasis on the results of a process instead of the detailed description of its tasks and steps.

               ·The standard has a stronger focus on information technologies. In recognition of the fact that hard-copy manuals, records and reports are slowly being phased out in favour of electronic versions, it incorporates the use of computer systems, electronic records and the production of electronic results and reports.

               ·A new section has been added introducing the concept of risk-based thinking and describes the commonalities with the new version of ISO 9001:2015, Quality management systems – Requirements.

               ·The terminology has been updated. Examples include changes to the International Vocabulary of Metrology (VIM) and alignment with ISO/IEC terminology, which has a set of common terms and definitions for all standards dedicated to conformity assessment.

               This third edition of the standard (EN ISO/IEC 17025:2017) cancels and replaces the second edition (EN ISO/IEC 17025:2005), and the reference to the standard in the Directive should therefore be updated accordingly.

               Taking into account the limited scope of the changes proposed, the Commission considers that a notification of the transposition measures by the Member States in accordance with the Joint Political Declaration of 28 September 2011 of Member States and the Commission on explanatory documents explaining the relationship between the components of the Directive and the corresponding parts of national transposition instruments will not be necessary.

               2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT

               Stakeholders were consulted in the framework of a meeting of the Marine Equipment Working Group (E02653), which comprises the Member State competent authorities and stakeholder representatives, on 3 November 2020.

               In addition, the general public was consulted through the standard 4-week public consultation on Delegated/Implementing Acts.

               3.LEGAL ELEMENTS OF THE DELEGATED ACT

               The Delegated Act replaces the reference to EN ISO/IEC 17025:2005 in Annex III of the Directive with a reference to the revised standard, EN ISO/IEC 17025:2017.

               COMMISSION DELEGATED DIRECTIVE (EU) .../…

               of 30.4.2021

               amending Annex III to Directive 2014/90/EU of the European Parliament and of the Council on marine equipment as regards the applicable standard for laboratories used by conformity assessment bodies for marine equipment

               (Text with EEA relevance)

               THE EUROPEAN COMMISSION,

               Having regard to the Treaty on the Functioning of the European Union,

               Having regard to Directive 2014/90/EU of the European Parliament and of the Council of 23 July 2014 on marine equipment and repealing Council Directive 96/98/EC
                  1
               , and in particular Article 36 thereof,

               Whereas:

               (1)Directive 2014/90/EU requires that conformity assessment bodies are to comply with the requirements laid down in Annex III in order to become notified bodies.

               (2)Conformity assessment bodies are to ensure that testing laboratories used for conformity assessment purposes meet the requirements of standard EN ISO/IEC 17025.

               (3)Standard EN ISO/IEC 17025 specifies the general requirements for the competence, impartiality and consistent operation of laboratories.

               (4)In 2017, ISO published a revision to standard EN ISO/IEC 17025 and has withdrawn the previous version of the standard, which could still be used during a three-year long transition period ending in November 2020.

               (5)The reference made in Directive (EU) 2014/90 to standard EN ISO/IEC 17025 should therefore be amended accordingly,

               HAS ADOPTED THIS DIRECTIVE:

               Article 1

               In point 19 of Annex III to Directive 2014/90/EU, the reference to standard ‘EN ISO/IEC 17025:2005’ is replaced by a reference to ‘EN ISO/IEC 17025:2017’.

               Article 2

               1.Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by [the last day of the month in which the date calculated as the date of entry into force of this Directive falls + 5 months] at the latest. They shall forthwith communicate to the Commission the text of those provisions.

               When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

               2.Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

               Article 3

               This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

               Article 4

               This Directive is addressed to the Member States.

               Done at Brussels, 30.4.2021

                     For the Commission

                     The President
                     Ursula VON DER LEYEN

                     (1)

                        OJ L 257, 28.8.2014, p. 146.