Responsible Investor’s Hugh Wheelan writes:

[T]he tipping points for the huge ESG shift we are witnessing are the regulatory drivers of The EU Green Deal and Action Plan on Financing Sustainable Growth. They are two blockbuster regional policy drivers that will have global ‘translation effects’ for all companies and investors; public or private, amplified rapidly under a new US administration and fed by China’s competitive streak to lead the green global energy transition. That’s my optimistic, 50,000-feet-high view of change, shorn of the horrible realities and hypocrisies that exist (vested interests, faux tech fixes, lobbying, global tragedy of the commons, etc, etc) for which much ink has been spilt – and will continue to be – given that this is the mother of all battles for the health of our world and our place in it. Are the EU policy drivers perfect? Of course not. But they’re all we’ve got right now on the big regulation front; and my rule of thumb (sic) when hitchhiking back in the day was to take the first ride that gets you nearer the destination, and then adjust, rather than wait for the perfect match. The EU policy drive is the best one around, and we need to back it strongly. And the regulations are finally driving real change in the investment world; even if that change in investment strategy, process, product and capital flows is still fledgling and often flawed: better late than never; but now time to hold it to account, and ramp it up massively! 

Anyone who thinks that the green investment shift is unlikely or impossible (no-one here, I know…but send it to sceptical colleagues or friends!) should read a paper titled: ‘Techno-optimism, behaviour change and planetary boundaries’, by Adair Turner, chair of the Energy Transitions Commission, a global coalition of major power and industrial companies, investors, environmental NGOs and experts working out pathways to limit global warming to well below 2˚C by 2040.

At RI, we believe the EU Green Deal and Action Plan on Financing Sustainable Growth are the biggest regulatory developments for business and finance since the introduction of global accounting standards for companies or Global Investment Performance Standards (GIPS) for investment managers.

Happy SFDR reporting day! The EU Action Plan isn’t perfect, but it’s the best we’ve got, and we must back it vigorously