As the regulatory framework concerning environmental, social and governance (ESG) issues continues to develop, new rules will govern how impact investing is undertaken. Although the core focus of the ESG agenda has been on environmental sustainability, social matters have also been addressed and are likely to grow in importance in the coming years, particularly in light of the economic recovery from the coronavirus pandemic.
Our latest briefing note provides an overview of regulatory initiatives applicable to impacting investing, focusing in particular on European Union (EU) and international developments. The regulatory developments touch on a range of topics including classification of sustainable economic activities, disclosures by investors and issuers, product governance, suitability and organizational requirements. It is discussed how new concepts around sustainability are being embedded in the regulatory framework, requiring firms to integrate ESG issues into their business practices. It is also considered how impact reporting will be introduced under new ESG disclosure requirements, while action is also being taken to improve the quality of disclosure among companies of information on their social impact.