Navigating the Past, Present, and Future
With the rise in popularity of ESG investing, investment firms have been left to navigate the proliferation of voluntary non-governmental standards that have filled the vacuum left by the absence of regulation. The current market fragmentation, opacity, and a heterogeneity in quality between and among the voluntary standards and associated offerings all heighten the risk of greenwashing.
As a result, EU policy drivers have developed regulatory standards that require investment firms to demonstrate the provenance of their ESG claims with robust data and analytic disclosures. Two of the most recent ones are the Sustainable Finance Disclosure Regulation (SFDR), which mandates investment firms undertake ESG risk analysis and publish product- and firm-level ESG disclosures, and the Taxonomy Regulation, which requires investments to be assessed according to strict criteria before being labeled environmentally sustainable.
In March 2021, FactSet’s Vanessa Barnett (Global Head of ESG), Nels Ylitalo (Director of Product Strategy, Regulatory Solutions), and Adam Salvatori (Global Head of ESG Client Solutions and Research), dove into the past, present, and future of the EU’s SFDR and Taxonomy Regulation, including timings of various measures and analysis on how they may impact the investment community even further.
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