That is set to change in Europe.
Before legislative work came to a halt for the recent EU elections, the European Parliament voted through regulations introducing stronger sustainable finance requirements for buy-side firms. When they take effect, most likely between 2020 and 2022, European asset managers will have to disclose how they integrate sustainability risks into their decision-making process.
European asset managers are starting to realise they will have to change their procedures and introduce ESG data to ensure they take into account sustainability risks and opportunities. Ultimately, this will drive further demand for ESG data and software solutions as firms prepare for compliance.
While certain requirements around climate change already exist across member states, this EU-wide harmonisation marks a step change. The new European Commission and Parliament are widely expected to reboot the EU Action Plan on Sustainable Finance, marking a new cycle of EU rule-making in the area.
What’s new?
The two new regulations form part of wider a push to integrate ESG considerations into financial law. Concretely, the new rules require asset managers to disclose: