How the EU is Helping Investors Navigate ESG

The EU's latest regulation is the most extensive work so far in helping investors to navigate the fast-growing choice of ESG and sustainable investment products

Andy Pettit 15 February, 2021 | 11:18AM
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In response to investor demand, asset managers are increasingly using environmental, social, and governance (ESG) factors as part of their security selection. Some 505 new ESG funds were launched in 2020 and another 250+ pre-existing funds repurposed with a new ESG focus.

However, because funds use widely varying nomenclature to describe their aims and approaches, investors still face challenges in determining what a sustainable fund does.
The EU’s Sustainable Finance Disclosure Regulation (SFDR) is policymakers’ most extensive work so far in helping investors navigate the growing choice of products.

The full details of what these additional disclosures will look like have now been put forward, having been delayed from 2020. At first glance it looks like it was time well used, with many questions answered and improvements made to the first draft.

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About Author

Andy Pettit  Director, Policy Research (EMEA), Morningstar