Sustainable Investment Challenges for Fund Boards

Asset management firms’ fund boards are being required to consider an increasing level of regulatory scrutiny, but lack clarity from regulators on their fund board oversight responsibilities in relation to sustainable investment.  According to a new report commissioned by the First Sentier MUFG Sustainable Investment Institute, fund boards face increased governance challenges due to the rapid evolution of sustainable investment. Variations in definitions as well as fast-evolving regulatory requirements can leave fund boards “questioning the expertise needed to ensure robust fund oversight”, the report said, adding that some fund boards have “a low involvement” in oversight of fund performance against sustainability objectives or characteristics, The report looks at the impact of sustainable investment on four areas of fund governance: delivery of a fund’s commitment to investors, compliance with laws and regulations, risk management, and board composition and expertise.

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