Close to half of the European infrastructure funds Linklaters surveyed are either “unaware” or unsure of EU regulations effective next year, which will require them to disclose how environmental, social and governance factors affect decision-making.
According to the law firm, which polled 302 fund managers with combined AUM exceeding £1 trillion ($1.3 trillion; €1.1 trillion), 34 percent were not aware of requirements for EU-regulated funds to disclose how they are taking positive and adverse ESG impacts into account in investment decision-making. A further 13 percent were “not sure” when asked if they were aware of the regulations.
The Sustainable Finance Disclosure Regulation will go into effect in March 2021 and looks to underline what counts as sustainable investment and to prevent greenwashing.
The findings contrast with the 32 percent that highlighted both ESG credentials and transparency as the second most important factors funds consider when managing their portfolios, after growth (36 percent).
Despite respondents being solely European-based outfits, the US emerged as the most-favoured investment destination, followed by the UK.
Linklaters said covid-19 had “rewritten the rules on risk management”, with seven in 10 respondents saying the crisis had affected how they approach risks in terms of high-impact, long-term and unpredictable events. As a result, 40 percent highlighted digital infrastructure as their favoured sector, followed by renewable energy (32 percent) and green infrastructure (24 percent). A spokesman for Linklaters said the latter sector was left deliberately broad to include assets other than renewables.