(Finance) – The topic of sustainability is now increasingly central in every sector: a multifaceted concept that embraces a decidedly broad perimeter. Within this very dynamic context, three key themes: cfile, nature and informative, which continue to record developments. The regulatory landscape, in fact, continues to evolve and its impact has repercussions on all markets. He explains it Stephanie Maier, Global Chief Sustainability Officer of GAM Investments in a long analysis in which he analyzes trends and scenarios.
Maier highlights first of all how the COP28 (The United Nations Conference on Climate Change) “served as a point of reference. For the first time, countries recognized the need to “move away from fossil fuels in energy systems.” While this recognition is critical, the agreement lacks of specific deadlines or mandatory measures. The final document also placed emphasis on a greater diffusion of renewable energies and an improvement in energy efficiency, but their implementation remains a national responsibility”
As companies and governments commit to climate action, “transparency becomes fundamental”explains the expert further, underlining that “regulatory authorities now require information on how climate-related risks and opportunities are managed. The United Kingdom, during its presidency of COP26, established the Transition Plan Taskforce. This initiative provides guidance on creating credible transition plans to enable investors to better assess their effectiveness. The asset management sector has also received bespoke guidance. While these principles are rooted in the UK, the aim is to make them global. While progress is gradual, recognition of the need for transition plans is growing.”
Nature – Biodiversity credits – As for the prospects for investment in biodiversity “remain a theme which the sector is actively dealing with. One of the factors that make nature a matter of financial and investment interest is the concept of biodiversity credits. Biodiversity credits represent measurable units of biodiversity that can be purchased and traded by companies. Similar to carbon credits, they serve as stepping stones to achieving nature-positive goals. Unlike carbon credits (which offset emissions), biodiversity credits focus on improving and restoring biodiversity. The goal is to create a market that channels public and private funding towards nature conservation efforts.”
Australia – Mayer explains further – “has a nascent market for biodiversity credits and the UK recently implemented biodiversity net gain legislation. For entrepreneurs, this means that if a project has an impact on biodiversity (for example by building on natural habitats), they must compensate for this by purchasing biodiversity credits. It is vital that these credits are credible, with appropriate governance, traceability and standardisation, drawing lessons from the evolving carbon credit market.”
Information – How does the management company’s reporting obligation affect it? – As for the transition from voluntary to mandatory reporting, it continues to shape the financial reporting picture. Management companies are faced with increased data requirements and a growing need for comprehensive information from the companies in which they invest , to support investment decisions and disclosures at entity and product level”.
The regulatory landscape – Labeling – As part of our reflection on the regulatory framework, “several key developments are significantly influencing the financial market, our products and our product disclosure. The EU Sustainable Finance Disclosure Regulation (SFDR) has been a point Although the consultation period ended in December 2023, the official response is not expected until 2026. A crucial question arises: Should SFDR evolve beyond the current disclosure regulation? Some suggest incorporating explicit labeling requirements with minimum standards. In the UK, December 2023 was a busy month for regulatory activity. The Financial Conduct Authority (FCA) unveiled its sustainability disclosure regulations, which include a system of labelling.
The UK’s previous regulatory proposal helped shape this debate. The emergence of these labels will not go unnoticed as Europe refines its labeling framework. We expect more specific guidelines to accompany existing anti-greenwashing principles.”
Evolving Global Trends – In addition to Europe – concludes the expert – “climate information requirements are spreading throughout the world, in countries such as Singapore, Japan and Australia. These countries continue to place emphasis on climate information. The United States are actively engaged in this area. China is intensifying disclosure efforts, including alignment with the listing requirements of major stock exchanges. The regulatory landscape is dynamic and interconnected.”