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Equally EFAMA continues to support the Commission’s overarching objective to place sustainable finance at the heart of the Capital Markets Union project. Asset managers embrace sustainability as an integral part of the investment process and support the development of responsible investment in all of its forms.
EFAMA welcomes the HLEG report’s acknowledgement that though climate action is highest on today’s political agenda, other sustainable development priorities are equally as important. EFAMA strongly believes in an EU sustainable finance agenda focused on a balance of the three E, S and G pillars.
EFAMA however has reservations about the HLEG’s recommendations regarding an Omnibus Proposal for clarifying investor duties with regard to sustainability. EFAMA has concerns that mandatory requirements in particular regarding investments will turn ESG into a compliance exercise and stifle innovation in the responsible investment market.
EFAMA believes regulation is not the appropriate way forward in this case as it can have significant unintended consequences.
Evidence shows that practices are already strong or getting stronger:
Asset managers are legally required to act in the best interests of their clients. Their business models revolve around protecting and enhancing their clients’ assets in the long-term.
Asset managers increasingly seek to integrate an assessment of material ESG factors in their investment process and decisions - where these factors are deemed to have a material impact on performance - to fulfil the long-term obligations to their clients.
The consideration of ESG strategies is an important element of how asset managers ensure they act in the best interest of their clients and protect their clients’ investments over the long-term. Applying ESG strategies in the investment process is indeed a risk management tool which helps better appreciate investment performance over the long-term.