ESG: The Regulatory Scrutiny Begins

Only a few countries are likely to be able to meet globally-agreed carbon reductions, which has left investors and companies wary of exactly when draconian policies to meet climate change initiatives will become inevitable.  The recent increase in consumer interest in ESG has only been matched by rising regulatory concerns regarding “greenwashing” – firms selling products under the auspices of green investments only for end-investors to discover they have been mis-sold. 

As ESG moves to the forefront of investors’ demand and becomes part of mainstream investing, the risks associated with green or social washing are not only becoming more prevalent, but also more complex. Investment firms are coming under increasing pressure to demonstrate just how they are adhering to sustainable investing principles in order to avoid the potential charge of greenwashing. Policy makers are waking up to the challenges and opportunities emerging as a result of financial services adjusting to a future carbon-neutral global economy, and asset managers will need to change how they assess companies to ensure compliance in a global 24/7 economy.

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EMEA Market Structure + Strategy Team