To embed sustainability considerations firmly into the mainstream of financial markets, the European Union’s Action Plan for Financing Sustainable Growth introduced a package of legislative measures which impact on all asset managers. This included three key regulations – the taxonomy regulation, disclosures regulation and the low carbon and positive impacts benchmark regulation – as well as measures to amend the UCITS, AIFMD and MiFID rules.
Our most recent report on ESG integration, prepared in October 2020, aims to help asset managers to navigate and better understand the impacts, requirements and timelines of the EU Action Plan for the industry.
The report, which you can download below, provides an update and our views on key subjects ranging from how ESG creates value for investors to topical regulatory matters and a useful timeline for asset managers, along with a summary of the findings from EY’s 2020 global institutional investor survey results which asks: how will ESG performance shape your future?
The report also includes an overview of the European supervisory agency joint consultation on ESG disclosures. The Sustainable Finance Disclosure Regulation (SFDR) comes into effect in March 2021 and under the level one requirements, disclosure is required as to how asset managers approach sustainability and identify and deal with principal adverse impacts. The European Commission believes that clear identification of adverse impacts of investments on sustainability will help mobilise end investors. The Commission has been responsive and pragmatic in considering a deferral to the application of the regulatory technical standards (RTS); however asset managers are still expected to comply with the level one requirements laid down in the regulation by March 2021.
Muntasir Khaleik, Director, Wealth and Asset Management commented:
The SFDR requires credible, reliable, and meaningful disclosures to end-investors. Asset managers will need to put in place a responsive technical infrastructure and develop the necessary knowledge to identify and measure the impacts of investments on sustainability.”
Muntasir also provides a short overview of ESG Integration for asset managers in the video below.
If you have a question on the implications of the EU Action Plan on your business or would like to discuss any element of ESG integration in more detail, don’t hesitate to contact us.