ESG regulation isn’t necessary, say fund managers

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    The majority of European investment management professionals are against the introduction of regulatory requirements that force ESG factoring to be included in their investment processes.

    The finding comes from the CFA Institute’s latest report – The Evolving Future of ESG Integration in Investment Analysis – which was conducted among its 24,000-strong membership base across Europe.

    Investment professionals in Luxembourg had the strongest opposition to the idea, with 78% of respondents saying they were not in favour, followed by 71% in the UK and 69% in Germany. When the data was divided by job title, research analysts were the most likely to be against, with 89% of respondents against a regulatory requirement for ESG factoring.

    Svi Rosov, the company’s director of Capital Markets Policy and author of the report, said the survey found that the majority of investment professionals were already using ESG factors, despite the research indicating a generally negative view of compulsory regulation.

    He said: “Our survey highlights that a majority of investment professionals across the European Union are already using ESG factors in the investment analysis process, to ensure that all material impacts on the potential investment are considered.

    “These ESG factors are part of the standard mix when analysts are assessing their portfolio investments, yet there is great concern whether the regulator should legally mandate ESG or any other factors considered by the investment profession.”

    A considerable 85% of those polled said they thought it was appropriate for institutional investors to consider ESG factors when making investment decisions, while 60% said that any mandate to consider ESG factors during investment analysis should not translate into forcing the manager or client into an ESG investment policy.

    https://www.cfainstitute.org/en/research/survey-reports/evolving-future-of-fiduciary-duty-in-an-esg-world