Regulators Are Focusing on Sustainable and ESG Investments

Among the key challenges with sustainable investing, as well as environmental, social and governance (ESG) investing, are the variety of frameworks and absence of consistent terminology, metrics and disclosure standards. Notwithstanding those challenges, ESG and sustainable investing have undeniably become a key trend in financial services, including private funds. With that increase in popularity, however, those types of investments have also received significant attention by regulators worldwide. A working group established by the International Organization of Securities Commissions (IOSCO) surveyed both regulators and market participants to explore their respective initiatives on and concerns with sustainable and ESG investing. An IOSCO report enumerates the findings of the survey and related research; the fundamental recurring challenges in ESG and sustainable investing; the relevant frameworks used to understand those forms of investing; and IOSCO’s potential role in addressing those challenges. This article explores the key takeaways from the report. For more on IOSCO, see “Intention to Conduct Annual Surveys of Hedge Fund Managers Based on Updated Systemic Risk Data Categories” (Apr. 12, 2012).

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