CySEC Commits to Achieving Sustainable Finance, Chairman George Theocharides Says

Sustainable development is a global priority that mobilises governments, civil society and businesses to adopt new practices, says Cyprus Securities and Exchange Commission Chairman Dr George Theocharides, stressing that sustainable investments are now of paramount importance in mitigating environmental degradation and social inequality.

Dr Theocharidis points out that by analysing ESG indicators, investors are able to assess how resilient and prepared a company is to manage changes in the environment in which it operates.   

As a result of this, he explains, investors are able to make decisions on the part of investors regarding the return on their investments, costs and capital allocation.

Dr Theocharidis continues: 

Through sustainable finance, it is possible to restructure private capital into more sustainable investments, promote sustainable and long-term economic growth, ensure the stability of the financial system, enhance transparency, as well as manage any risks arising from environmental and social issues.

The Securities and Exchange Commission reaffirms its commitment to encourage and comply with the standards of sustainable finance as set out in the European Union Action Plan. The CySEC has created a dedicated section on its website on sustainable finance, while at the same time all market participants have been urged to take the necessary steps and ensure full compliance with the new regulatory requirements, in particular the Sustainability Disclosure Regulation (SFDR).

As one of the key issues guiding CSR policy making and strategic planning, sustainable finance is articulated in line with the Commission's vision and mission through three key pillars:

- Authorization and oversight to protect the interests of investors by ensuring that companies subject to SEC oversight comply with relevant legislation.

- Educating and encouraging the building of market participants' understanding of sustainable finance, while providing support through the CySEC Innovation Hub. 

- Policy making at European level, as the ESMA works closely with both the European Securities and Markets Authority (ESMA) and other relevant national authorities, notably through participation in ESMA working groups and standing committees.                                                                           

In Cyprus, a number of alternative investment funds have an investment policy that focuses on environmental, social and governance factors. At the end of 2021, based on data collected from asset managers in Cyprus, 33.4 million funds under management have a sustainable investment strategy. 

Finally, CySEC believes that the risks of mislabelling, misrepresentation and mis-selling, which are embodied in the term 'greenwashing', have a negative impact on sustainable finance. Its aim is to safeguard and protect investors from malicious practices through early detection and deterrence of such instances, and to take action and impose strict consequences to discourage them in the future.