sustainable finance

As the year ends, asset managers across Europe are anticipating the launch of even more stringent requirements for sustainable investments. At the same time, it’s increasingly becoming clear that EU regulation leaves ample room for investment managers to choose for themselves how they describe their ESG or impact investments.

The first of January marks a significant milestone in the European Union’s efforts to promote sustainable and responsible investing. The EU introduces the level 2 Regulatory Technical Standards for the Sustainable Finance Disclosure Regulation, known as SFDR. This requires sustainable investment funds to make a bigger effort to explain how they seek to achieve a positive impact.

Engaging with investors on sustainable investing requires answering two questions: How do sustainability factors impact returns? How do investment choices impact the world? “Good Practices in ESG Reporting” is the topic of this Benelux webinar hosted by Morningstar and Investment Officer.

The demand for ESG-compliant investments is growing, especially among professional investors. The urgency of climate change and the regulatory requirements are driving the development for responsible investing. 

Vanguard, the world’s second-largest investment fund manager after BlackRock, is finding itself in a political tug of war in the US that now has led to its decision to withdraw a top international alliance of asset managers that seeks to promote sustainable, net zero investments, the Net Zero Asset Management initiative, also known as NZAM.

Luxembourg’s financial supervisor CSSF has made clear that it expects investment funds that commit to sustainability objectives will stick to these commitments. If a fund defines thresholds for specific ESG or sustainability investments, then it should consider these as a “binding commitments”.

Europe’s asset management industry finds itself under a public magnifying glass after a team of international investigative journalists discovered that the most sustainable funds are still investing in polluting companies. Earlier warnings on possible reputation risks, also from specialists inside the sector, now echo loudly, but so does the observation that a lack of clarity in the current sustainability regulations poses significant challenges, both for the industry and investors.

A new set of rules - part of an update to the EU’s Mifid 2 directive - took effect in Luxembourg on Tuesday that will set out how banks and asset managers are required to handle their investment products in terms of Environmental, Social and Governance.

Morningstar and Investment Officer Luxembourg invite you to join us online on Thursday 1 December 2022 at 15 CET for the “Good Practices in ESG Reporting” interactive online debate. 

A panel of sustainable finance experts from financial institutions and authorities in the Netherlands, Belgium and Luxembourg will debate good practices in ESG reporting for investors and asset managers. 
 

The EU’s top category of sustainable investment funds - impact funds as defined under SFDR Article 9 - saw inflows double in the third quarter compared to the second, while funds that are considered mostly sustainable, or Article 8 ESG funds, continued to bleed, research insights by Morningstar show. The analysis also shows that more than 380 funds were reclassified during the third quarter.