IOSCO finalized recommendations for sustainability-related asset management practices.

In response to feedback from its June 2021 consultation, IOSCO recommended that securities regulators:

  • set regulatory and supervisory expectations for asset managers as to sustainability practices and disclosures;
  • improve product disclosure;
  • monitor and evaluate compliance by asset managers;
  • encourage the development of common sustainable finance-related terms and definitions; and
  • promote sustainability-related investor education initiatives.

Based on responses to the consultation, IOSCO found that sustainability-related requirements for the practices and disclosures of asset managers primarily pertained to (i) investment strategy, (ii) risk management, (iii) metrics and targets and (iv) most commonly, governance. IOSCO observed that while there may be similarities in the types of disclosure covered by such requirements across jurisdictions, there is variation in implementation and scope.

IOSCO found that responding jurisdictions that did not have sustainability-specific requirements for asset management practices tended to rely on existing regulations to address sustainability-related issues. IOSCO explained that the primary reasons cited are that (i) sustainability-related products do not comprise a substantial portion of the markets in those jurisdictions and (ii) existing regulations sufficiently address sustainability-related products and issues in asset management practices.

Primary Sources

  1. IOSCO Press Release: Setting regulatory and supervisory expectations for asset managers is fundamental to address greenwashing concerns, says IOSCO
  2. IOSCO Report: Recommendations on Sustainability-Related Practices, Policies, Procedures and Disclosure in Asset Management

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