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Surveying the global regulatory landscape for investors

Over the last ten years, ESG investing has picked up momentum in the global asset management community, with particular regions and governments leaning deeper into the strategy than others. But as 2020 unfolded, regions that previously moved slowly to embrace ESG began to take more meaningful action.

Following the impact of an unforeseen, catastrophic event as well as its accompanying economic recession, firms have made connections from the current experience to what the industry could face in the future as a result of environmental change, DE&I initiatives and governance requirements, fueling adoption of socially responsible investment strategies.

Now, as regions look closer at their ESG practices, regulatory bodies are stepping up their plans for oversight. Though certain geographic regions are more advanced in their ESG approaches than others, regional differences are quickly reducing as global frameworks and standards develop.

Summary:

  • Europe is known not only as a regional leader, but as a global leader for ESG, and the EU has designed a structured, intentional, and growing web of policies while on a journey to achieve net zero targets and other positive impacts.
  • In the Middle East, many countries have adhered to Islamic finance and shariah investing guidelines for decades. Now, key groups and countries within the region are accelerating their own ESG developments outside of shariah investing motivations.
  • Several of APAC’s independent, developed countries are moving quickly to standardize ESG regulation in an attempt to become the region’s go-to locale for domiciling ESG investments and funds.
  • In North America, the U.S. and Canada vary in their approach to ESG investing and guidance designed to regulate it. While the U.S. lags its northern neighbor, its regulatory bodies have begun to consider how to filter a sustainable perspective into its oversight of financial markets.
  • Regulators will guide the global frameworks, but as asset owners place more of an emphasis on investing in sustainable assets, and as asset managers survey their preparedness for supporting ESG investing in this new sought-after capacity, they should consider the ways their own defined ESG policies and emerging regulatory reporting requirements will impact their portfolios.

Download our latest whitepaper to learn more about the ESG regulatory landscape around the world.

Katie Pries

Katie Pries

President & CEO, Northern Trust Company Canada
Mark Austin

Mark Austin

Head of Asset Owners, UK, and Pensions and Insurance Executive, Europe

Stephen Gwynne

Head of Investment Risk and Analytics Services, Asia Pacific