European Securities and Markets Authority (ESMA) published its fourth annual statistical report, which investigated the investor returns provided by the environmental, social, and governance (ESG) funds, and updated the questions and answers (Q&A) on the Benchmarks Regulation or BMR. The updates are mainly in reference to the Q&A section on climate transition benchmarks, Paris-aligned benchmarks, and sustainability-related disclosures for benchmarks.
The statistical report provides consistent European Union-wide information on cost and performance of retail investment products, including information about the Undertakings for Collective Investments in Transferable Securities (UCITS) that follow environmental, social and governance (ESG) strategies. The report findings show that UCITS with an ESG strategy (including equity, bond, and mixed funds) has outperformed the non-ESG peers. ESG equity, bond, and mixed funds were overall cheaper than non-ESG peers. The report found that impact funds within the ESG fund category performed better than other ESG strategies while funds with sustainable investment as an objective also performed better in net terms (after having included costs), in comparison to those promoting environmental or social characteristics (despite slightly higher costs). This report complements the risk assessment, supervisory convergence, and investor protection work of ESMA and contributes to the European Commission’s project on cost and performance of investment products under the Capital Markets Union Action Plan.
Keywords: Europe, EU, Banking, Securities, UCITS, ESG, Climate Change Risk, Sustainable Finance, Q&A, Reporting, Benchmarks Regulation, Disclosures, ESMA
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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