Europe: EU / UK regulatory roundup
A round up of recent regulatory developments in the EU and UK.
Some of the world’s largest pension funds and asset managers are drawing up plans for mandatory corporate reporting of climate issues and carbon pricing, among other actions, as outlined on day 8 of COP25 in Madrid. A panel moderated by Sir Nicholas Stern, attracted some of the largest pension funds and asset managers globally including Aviva, the Japanese Government Pension Fund, the Danish Pension Fund PFA, Allianz (also representing the Asset Owners Alliance, members of which commit to reduce carbon emissions of their investment portfolios to net-zero by 2050), the German Central Cooperative Bank and BNPP.
Each was tasked with identifying action required for governments to drive transformative change through finance. Key takeaways called for were:
In terms of action, examples include the Japanese Government Pension Fund (the world’s biggest pension fund) making Environmental, social and governance (ESG) a key decision point in its selection of asset managers. The organization is also pushing a change of benchmark indexes that it uses to provide a greater ESG focus. Aviva is looking to embed climate change expertise within debt and equity teams with the objective of backing the right investments, and diverting capital away from those not part of the climate fight. The German Central Cooperative Bank representative provided a series of actionable suggestions, including building sustainable development bond purchasing directly into sovereign bonds to mainstream them quickly, and using FinTech and document standardization to speed up access to green bonds.
Whilst the commitment of business to mitigating climate change is not new, it is clear that global pension funds and other key financial players recognize the gravity of the risks facing the planet if transformative change does not happen in the 2020s. The key takeaway was a call for governments to catch up.
On July 16, 2020, the Court of Justice of the European Union (CJEU) published its decision in the landmark case Data Protection Commissioner v Facebook Ireland Ltd, Maximilian Schrems and intervening parties, Case C-311/18 (known as the Schrems II case).
On July 7, 2020, the Commission de Surveillance du Secteur Financier (CSSF) issued an FAQ document on Circular 02/77 concerning the protection of investors in case of NAV calculation errors and the correction of the consequences resulting from non-compliance with the investment rules applicable to undertakings for collective investment (the FAQ).