EU sustainable finance proposals for asset managers and advisers

 ESG Duties and Disclosures

Earlier this year, the European Commission published a package of legislative proposals on sustainable finance, which are aimed at firms involved in investment decision-making processes and firms providing investment advice.

The key impacts of these measures as proposed for asset managers and advisers are:
 
  • integration of ESG factors and risks in the legal duties firms owe to investors and/or clients;
  • formal obligations to disclose how sustainability risks are integrated into their organisations and the services provided to clients;
  • where firms market themselves as pursuing a low carbon emission objective, they may need to designate and comply with methodologies for “low carbon” or “positive carbon impact” benchmarks; and
  • firms may also need to capture and reflect clients’ ESG preferences where suitability assessments are required under MiFID II.

See our note for more information on the proposals, and how they might apply in the UK during the Brexit process.