ESG regulatory framework for asset managers in the EU, UK, US and Singapore: The role of social knowledge and value judgement in the asset manager ESG business strategy
The Centre for Climate Finance & Investment (CCFI) at Imperial College Business School, in collaboration with the Singapore Green Finance Centre, has released a comprehensive article examining ESG regulatory frameworks for asset managers across the EU, UK, US, and Singapore.
The article delves into the evolving landscape of ESG regulations, highlighting the need for asset managers to navigate complex global regulatory environments. It explores how regulations shape market conventions and influence asset managers' ESG business strategies.
Key points covered in the research include:
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Regulatory Developments: The EU and UK lead in ESG regulatory initiatives, aiming to redirect capital towards sustainable finance and align with the Paris Agreement. The US follows a principle-based approach, while Singapore emphasizes transparency and adherence to guidelines.
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Common Trends: Despite structural differences, regulatory regimes show common trends such as expanding the ESG framework, moving towards corporate disclosures, and allowing flexibility for asset managers to define ESG strategies.
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Theoretical Framework: The research leverages social and economic theories to analyze cognitive mechanisms and information dissemination in social systems, shedding light on the role of regulations in shaping ESG frameworks.
The authors emphasise the importance for asset managers to understand regional variances in regulations to maintain competitiveness in ESG fund offerings. The article stresses the need for awareness of cognitive and information transmission mechanisms among asset managers. Andrea Savi and Dr Anastasiya Ostrovnaya suggest that in the complex regulatory landscape, ESG fund offerings require alignment with asset manager structures, systems, and culture. They advocate for allowing portfolio managers' value judgments in defining sustainable assets, subject to market validation.
"This study highlights how asset managers should look at ESG regulations globally, if nothing else, for the long-term competitiveness of their ESG fund offering. As this article suggests, regulations played a pivotal role in the developments of the ESG framework, thus understanding regional variances and underlying principles, may help firms anticipating investor preferences.*"
*Andrea Savi declares that the entire content of this article represents his own personal and independent view and does not reflect in any way the opinions and positions of Janus Henderson Investors or its affiliates.