Business & Investment

Editor’s Letter: Big New Hope

Investors have long sought standardized sustainability reports. When it came into force in March of this year, the EU’s Sustainable Finance Disclosure Regulation (SFDR) caused a serious wave across the asset management industry. More than one-fifth of European funds already meet Article 8 or 9 requirements by 18% and 3.6%, respectively, according to Morningstar data, making Europe’s ESG and sustainable fund markets the largest It is estimated to be worth 2.5 trillion euros.

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But there is no doubt that this is more than visible. In a recent interview, Ashley Hamilton, Head of Responsible Investment at Royal London Asset Management, said: Investment week Regulations are “ambiguous and unclear” and investment managers “have a lot of discretion in how to apply them”-especially with respect to Article 8 funds. According to SFDR requirements, Article 8 funds must have “environmental or social characteristics, among other characteristics”.

According to Amy Clarke, Chief Impact Officer at Tribe Impact Capital, even the darker green Article 9 fund needs to be investigated than the Article 8 fund. For example, a framework.

“My slight concern about SFDR is that other wealth managers may take this at face value and say,’that’s enough.’ But that’s not always the case, “she warned. “SFDR is useful from a due diligence perspective, but you really need to understand managers, processes, philosophies, and performance before making a decision.”

SDR has also been rolled out to UK funds, most of which have already implemented SFDR. In particular, the roadmap is registered in the UK and is at the UK listed company level. Laura Houet, a partner at law firm CMS, said on this week’s front page:

Another feature of the positively accepted roadmap is the reference to the British classification. It has not been created yet, but it has six environmental goals that are the same as the EU taxonomy.

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“The advantage in the UK is that the FCA will discuss screening criteria for the first two goals in early 2022, after they have already been implemented in the EU,” said Mikel Bates, regulatory manager for FE Fund Info. Told. Investment week..

Ironically, however, there is always the risk that increased reporting requirements will provide more places for dishonest asset managers to hide.

“Asset owners and investors need to remain vigilant,” said JB Beckett, a member and ambassador of the Transparency Task Force. “Compliance and regulation usually don’t drive cultural change, but in TikTok’s investment and crypto world, environmental friendliness is a big new hope for selling dilapidated investment trust brands. ..

“The role of professional fund investors in addressing these requirements cannot be fully stated.”

Editor’s Letter: Big New Hope Editor’s Letter: Big New Hope

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