On 2 March 2022, 175 nations endorsed a historic resolution at the fifth session of the United Nations Environmental Assembly to develop a draft global agreement on plastic pollution by the end of 2024. Significantly, the resolution covers the full lifecycle of plastic including its production, design and disposal. Inger Andersen, Executor Director of the
The sustainable investing market is witnessing remarkable growth: since 2018, annual cash flows into sustainable funds have increased tenfold. Now, more than ever, investors and asset managers alike seek sustainable products and strategies offering robust financial returns. The field, however, has been haunted by greenwashing claims and a lack of consistency in identifying what, exactly, makes an investment “sustainable”.
Sustainability or “green” taxonomies developed by governments, international bodies and non-governmental organizations (NGOs) can help resolve these challenges and inconsistencies by identifying specific assets, activities or projects that meet defined thresholds and metrics that quantify sustainability. These systems can cover the full spectrum of sustainability topics, from achieving acceptable levels of greenhouse gas emissions to compliance with certain human rights standards. Among other benefits, sustainability taxonomies can:
In this series of Blog Posts, we first provide a brief overview of some of the key existing and developing taxonomies around the world. We then set out our analysis of the ways asset managers are already leveraging taxonomies in their businesses based on a review of publicly available responsible investment reports. Finally, we highlight certain challenges that asset managers may encounter as these systems develop and interest in sustainable investing continues to grow.
Continue reading this Part III to understand some of the taxonomy-related challenges that asset managers may encounter. You can find Parts I and II here and here.
The sustainable investing market is witnessing remarkable growth: since 2018, annual cash flows into sustainable funds have increased tenfold. Now, more than ever, investors and asset managers alike seek sustainable products and strategies offering robust financial returns. The field, however, has been haunted by greenwashing claims and a lack of consistency in identifying what, exactly, makes an investment “sustainable”.
Sustainability or “green” taxonomies developed by governments, international bodies and non-governmental organizations (NGOs) can help resolve these challenges and inconsistencies by identifying specific assets, activities or projects that meet defined thresholds and metrics that quantify sustainability. These systems can cover the full spectrum of sustainability topics, from achieving acceptable levels of greenhouse gas emissions to compliance with certain human rights standards. Among other benefits, sustainability taxonomies can:
In this series of Blog Posts, we first provide a brief overview of some of the key existing and developing taxonomies around the world. We then set out our analysis of the ways asset managers are already leveraging taxonomies in their businesses based on a review of publicly available responsible investment reports. Finally, we highlight certain challenges that asset managers may encounter as these systems develop and interest in sustainable investing continues to grow.
Continue reading this Part II for our analysis of how asset managers are already leveraging taxonomies. You can find Parts I and III here and here.
The sustainable investing market is witnessing remarkable growth: since 2018, annual cash flows into sustainable funds have increased tenfold. Now, more than ever, investors and asset managers alike seek sustainable products and strategies offering robust financial returns. The field, however, has been haunted by greenwashing claims and a lack of consistency in identifying what, exactly, makes an investment “sustainable”.
Sustainability or “green” taxonomies developed by governments, international bodies and non-governmental organizations (NGOs) can help resolve these challenges and inconsistencies by identifying specific assets, activities or projects that meet defined thresholds and metrics that quantify sustainability. These systems can cover the full spectrum of sustainability topics, from achieving acceptable levels of greenhouse gas emissions to compliance with certain human rights standards. Among other benefits, sustainability taxonomies can:
In this series of Blog Posts, we first provide a brief overview of some of the key existing and developing taxonomies around the world. We then set out our analysis of the ways asset managers are already leveraging taxonomies in their businesses based on a review of publicly available responsible investment reports. Finally, we highlight certain challenges that asset managers may encounter as these systems develop and interest in sustainable investing continues to grow.
Continue reading this Part I for a better understanding of existing and developing taxonomies around the world. You can find Parts II and III here and here.
On November 23, 2021, the International Organization of Securities Commissions (IOSCO) issued its “Environmental, Social and Governance (ESG) Ratings and Data Providers” final report in which IOSCO makes 10 recommendations related to the use of ESG ratings and data products in financial markets. In a new Legal Update, we discuss the report and
On November 26, 2021, Hong Kong’s Mandatory Provident Fund Schemes Authority (MPFA) advanced the Special Administrative Region’s sustainable finance strategy with new Principles for Adopting Sustainable Investing in the Investment and Risk Management Processes of MPF Funds (the Principles). The Principles lay out a high-level ESG integration framework for trustees of Mandatory Provident Funds (MPF), the investment vehicles for the Hong Kong’s mandatory retirement protection scheme, across four key elements: governance, strategy, risk management and disclosure.
In this Blog Post, we provide a brief overview of the Principles and highlight each element, as well as important next steps for MPF trustees. We also provide guidance on how companies are already implementing ESG frameworks similar to the Principles.
The sheer volume of capital flows into sustainable, or ESG-focused, funds and products over recent months reflects the rapidly increasing number of investors with ESG-related preferences, or demands, when selecting those investments. Evaluating, and comparing, the ESG credentials of different investment products presents significant difficulties, however, in circumstances where information and disclosures about those products – and even the terminology used – are, at best, inconsistent, and often incomplete; and, at worst, may attract accusations of “greenwashing”, by using marketing materials to mislead investors about the ESG approaches used in their products.
Continue Reading The CFA Institute releases Global ESG Disclosure Standards for Investment Products
Climate change could have serious impacts on the mortgage industry, and stakeholders should take action now. That is the recent urgent message from federal regulators and mortgage industry stakeholders.
Recent reports and initiatives from the Mortgage Bankers Association’s Research Institute for Housing America, the White House, the Departments of Housing and Urban Development, Veterans Affairs
On 22 October 2021, the three European Supervisory Authorities (EBA, EIOPA and ESMA – the “ESAs“) delivered to the European Commission the expected Final Report with draft Regulatory Technical Standards (RTS) with respect to additional pre-contractual and periodic disclosure relating to financial products that make sustainable investments contributing to environmental objectives (“Draft SFDR Amendment RTS” – JC 2021 50). By virtue of such new draft rules, the EU will regulate the market by establishing standardized disclosures.
Under a formalistic approach, such new Draft SFDR Amendment RTS as level 2 measures under the EU Sustainable Finance Disclosure Regulation (“SFDR“, Regulation (EU) 2019/2088) aim to
Continue Reading New EU Rules for Taxonomy-Related Product Disclosures
With the 2021 United Nations Climate Change Conference (also known as COP26) coming to Glasgow later this month and amid numerous occurrences of extreme weather, there has been an increased global focus on climate change recently which is reflected in the financial markets. By some estimates, the sustainable finance market grew by almost 30% in 2020. Derivatives linked to ESG objectives have been around for several years, but this previously niche marketplace is growing, reinforcing the idea that derivatives have a key role to play in the advancement of ESG objectives in the financial markets and the global transition to a green economy.
Continue Reading ESG Derivatives: A Sustainable Trend