Ratings agency Fitch has launched a new report comparing fund-level ESG regulatory developments across North America, Europe and Asia and the potential impact on asset managers and funds. In the US, the Securities and Exchange Commission (SEC) has proposed ESG fund labels – ‘ESG-focused’, ‘ESG impact’ and ‘ESG integration’. The UK is also proposing ESG fund labels – ‘sustainable focused’, ‘sustainable improvers’ and ‘sustainable impact’. Meanwhile, in Canada, there are no legal requirements for ESG-related fund disclosures, but the Canada Standards Association has published guidance on the disclosure practices of investments, including requirements based on a fund’s name. In the EU, the Sustainable Finance Disclosure Regulation (SFDR) places disclosure requirements on sustainable funds and the European Securities and Market Authority is proposing a minimum ESG investment threshold for funds with an ESG-related name. Hong Kong, Taiwan and Singapore are all proposing levels of disclosure for ESG funds. The Swiss Financial Market Supervisory Authority has requirements on funds that label themselves as ESG or sustainable. These moves will increase costs and reputational risks for asset managers and funds, said Fitch.
