With regulators ramping up environmental, social and governance (ESG) requirements, asset owners and managers are reviewing their internal modules and crafting their pathways to integrate sustainability into their investment process. Europe is taking the lead with the implementation of new ESG regulations that provide both benefits and challenges for Asian asset owners and managers. Although ESG regulation in Asia lags behind Europe, the region is catching up fast. In markets like China, the world’s largest emerging market, domestic ESG data disclosure requirements have more than tripled since 2009. And authorities in the Singapore and Hong Kong markets have both set ESG disclosure standards.

Still, for asset owners and managers, challenges remain. Compliance is currently hampered by the lack of a common set of standards and the proliferation of non-standardized ESG data in the market. The publication of the EU-China Common Ground Taxonomy is a step towards enhancing comparability, and the eventual publication of an Asean Taxonomy will provide a common language for sustainable finance across Southeast Asia.

One of the main objectives of devising taxonomies and adopting regulations is to address the problem of greenwashing – the practice of making portfolios appear more sustainable than they really are. Reducing the level of greenwashing is expected to fast-track ESG integration and speed the transition to sustainable investing in a more cost-efficient manner for both asset owners and asset managers.

The Asset Events, in association with BNP Paribas, is pleased to host this in-depth roundtable discussion examining the implications of ESG regulations and frameworks on asset owners and managers.