On 29th July 2020, the Irish Funds Industry Association (IE) published a white paper on Irish Funds Sustainable Finance Regulatory Overview.
Sustainable investing and ESG integration are key priorities for investors and policy makers are leading on a number of initiatives aimed at transitioning to a more sustainable economy. As the EU Commission seeks to reorient private capital flows towards sustainable investments to meet its climate and energy targets, a package of legislative measures has been introduced to help achieve this. These measures will have impacts for asset managers, their products and their investors.
Key Proposals:
The Action Plan identifies 10 key points but for funds and their management companies, the key proposals relate to:
- Establishing a taxonomy for sustainable activities.
- Creating standards for green financial products.
- Incorporating sustainability as part of financial advice.
- Developing sustainability benchmarks and better integrating sustainability into ratings.
- Strengthening the disclosure made by asset managers and financial advisors to their clients
These are achieved by three key measures:
- Taxonomy Regulation: A regulation on the establishment of a framework to facilitate sustainable investment.
- Low Carbon Benchmarks Regulation: An amendment to the EU Benchmarks Regulation to introduce new ESG related benchmarks.
- Disclosures Regulation: The EU Regulation on sustainability-related disclosures in the financial services sector.