The theme of sustainability is now more and more central in every sector: a multifaceted concept that embraces a decisive perimeter ample. Within this very dynamic context, tking i key themes: climate, nature and information, which continue to record developments. The Pregulatory landscapeIn fact, it 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.
Climate – COP 28 commitments for the climate
Maier highlights first of all how the COP28 (The United Nations Conference on Climate Change) is “served as landmark. For the first time, countries have recognized the need to “move away from fossil fuels in energy systems”. While this recognition is crucial, the agreement lacks specific deadlines or mandatory measures. The final document also placed emphasis on a greater diffusion of renewable energy and an improvement in energy efficiency, but their implementation remains a national responsibility”
As the companies and governments do commit to action on the climate, “transparency becomes fundamental”, explains the expert, 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 allow investors to better evaluate their effectiveness. The asset management sector has also received bespoke guidance. Even though these principles are rooted in the United Kingdom, the goal is to make them global. Although progress is gradual, recognition of the need for plans transition is growing.”
Nature – Biodiversity credits
As for the investment prospects on biodiversity “remain an issue that 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 – explains Mayer – “has a market nascent 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 essential that these credits are credible, with adequate governance, traceability and standardisation, drawing lessons from the evolving carbon credit market.”
Information – CHow does the management company's reporting obligation affect it?
As for the transition from rvoluntary reporting to the mandatory one “continues to outline the framework of financial reporting. Management companies are faced with increasing data requirements and a growing need for comprehensive information from the companies in which they invest, to support investment decisions and disclosures at the entity and product level.”
The regulatory landscape – Labeling
As part of our reflection on regulatory framework, “Several key developments are significantly impacting the financial market, our products and our product disclosures. The EU Sustainable Finance Disclosure Regulation (SFDR) has been a focal point. Although the consultation period ended in December 2023, the official response is not expected until 2026. A crucial question arises: Should the SFDR evolve beyond the current disclosure regulation? Some suggest incorporating explicit labeling requirements with minimum standards. In the United Kingdom, December 2023 was a busy month for regulatory activities. There Financial Conduct Authority (FCA) has unveiled its sustainability disclosure regulations, which include a labeling scheme.
The previous regulatory proposal of United Kingdom 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 the existing anti-greenwashing principles”.
Ever-evolving global trends
Beyond to Europe – concludes the expert – “Climate disclosure requirements are spreading around the world, in countries like SSingapore, Japan and Australia. These countries continue to place an emphasis on climate information. The United States is actively engaged in this area. There China is stepping up disclosure efforts, including aligning with the listing requirements of major stock exchanges. The view regulatory is dynamic and interconnected”.
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