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In a response to the European Commission’s Targeted Consultation Document: Implementation of the Sustainable Finance Disclosures Regulation (SFDR), ACCA (the Association of Chartered Certified Accountants) and CISI (the Chartered Institute for Securities & Investment) say that the EC has an opportunity to influence wider global regulations including SEC greenwashing rules, using the lessons learnt from the SFDR and other jurisdictions’ regulatory successes in this space.
ACCA and CISI say that to ensure effective regulation, the SFDR needs greater guidance and clarification. The response was informed by the two bodies’ policy positions, sustainability focused engagement across the EU and UK, and roundtable discussion.
Jessica Bingham, Policy & Insights Lead, (EEMA & UK), ACCA, said: ‘We recognise that SFDR has driven increased transparency for investors, enabling them to make informed decisions based on the sustainability practices of asset managers and the environmental, social, and governance (ESG) characteristics of investments.
‘It has led to greater accountability for asset managers and a stronger emphasis on ESG integration in investment decision-making processes. As we shift to genuine impact investment, asset managers are now recognising the value of impact investing as a means to fulfil their fiduciary duty to investors, while also contributing to societal and environmental progress.’
However, adhering to the SFDR's extensive disclosure requirements can be costly for asset managers, as it requires gathering and analysing vast amounts of ESG data, developing and implementing new reporting systems, and training staff on the regulation's intricacies. This can put a strain on asset managers' budgets and limit their resources for other critical initiatives. In some scenarios this has led to sustainability being the first area to cut.
George Littlejohn, CISI Senior Adviser, said: ‘ACCA and CISI question the extent of positive impact that the SFDR's mandatory disclosure requirements have had. We believe that in many ways the nature of the regulation has hindered some firms as opposed to inspiring better practice and investment. ...
more at ACCA/CISI