But some of the largest companies in Europe have failed to report direct emissions data, hampering fund managers’ ability to comply with a new regulation to perform carbon footprint analysis on their holdings.
The Sustainable Finance Disclosure Regulation is part of European legislation that promotes investment in more sustainable businesses. The objective is to ensure financial market participants can finance sustainable, long-term growth and act in the best interests of investors, including the requirement to conduct due diligence before making sustainable investments. At its heart is the need to report environmental, social and governance adverse indicators for all companies in a sustainable portfolio. More fund managers, including Robeco, Aegon and Axa, consider climate change and biodiversity in their investments.
“The finance industry is in the process of an adjustment that could be very significant as firms come to the realization that a substantial part of our economy relies on natural capital, and we’ve been using it as a free resource, depleting it and consuming more than its capacity to regenerate,” Hubert Keller, managing partner at Lombard Odier in Geneva, told Bloomberg Green.