Institutional Asset Manager Newsletter 15.09.23

Washing out the greenwash

Anyone doubting the efficacy of initiatives to stamp out greenwashing in asset management can be rest assured that regulator efforts, in Canada and Europe at least, are achieving the desired effect.
This week we report on CFA Institute research that finds the EU’s Sustainable Finance Disclosure Regulation (SFDR) and the Canadian Securities Administrators (CSA) Staff Notice, have had a "positive impact in improving transparency in investment fund disclosures".
This, the CFA notes, is in contrast to the US which despite being the largest centre for asset management in the word, still lags its British, European and Canadian counterparts on sustainable investment regulation.
But the institute was not without criticism of the EU approach to regulation noting that while the SFDR and EU green taxonomy have likely helped mitigate potentially confusing information, the complex regulatory landscape "risks funds setting more ambitious sustainable investment objectives".
Regulators will need to heed this warning or risk undoing the important progress they’ve achieved so far.
Elsewhere we hear that far from being cowed by the impact of last year’s gilt crisis, the UK’s defined benefit (DB) trustees have almost unwavering faith in their ability to oversee liability-driven investment (LDI) strategies.
Research from Charles Stanley Fiduciary Management finds that more than eight out of 10 (82 per cent) trustees looking after a combined GBP1.38 billion in assets, believe they had the "knowledge and skills they needed to handle the crisis", while more than three-quarters (78 per cent) say their scheme "had the right governance in place" to respond to the fall in gilt prices.
Further, 72 per cent say they are "confident using LDI as a tool to manage risk".
This might be surprising to the members who were affected by the crisis and saw GBP500 million wiped from their schemes almost overnight.
Further, this high level of confidence will likely do little to dissuade the government from imposing stringent governance constraints on those using LDI strategies to avoid a repeat of the costly and embarrassing scandal in future.
Don’t forget nominations are still open for the Institutional Asset Manager service provider awards 2023.
Be ready to nominate your favourite service providers in the institutional asset manager awards at this link.
Gill Wadsworth, Editor
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