European Commission legislative proposals that would force asset managers to consider sustainability factors when making investment decisions have encountered a mixed reception from three financial trade bodies.
According to the Commission, which will publish its proposals in greater detail in June, EU regulation on sustainable investment is “neither sufficiently clear nor consistent across sectors”.
However, the international arm of the US’s Investment Companies Institute, ICI Global, said that it feared the proposals on asset managers’ duties could reduce investment choices for savers and make it more difficult for fund managers to act in the best interest of their investors.
“We will be closely engaged with policymakers as a legislative proposal advances, urging them to chart a different course – one that respects investor choice and important fund manager responsibilities,” said a spokesperson for ICI Global.
The Association of the Luxembourg Fund Industry (Alfi) has also expressed reservation about the plans which aim to encourage environmentally-friendly investments.
Alfi chairwoman Denise Voss said: “While we welcome the action plan, we believe that no specific legislative measure is needed to clarify asset managers’ duty to incorporate sustainability in the investment process.
“Market growth demonstrates that managers are already aware that sustainability criteria are essential elements in ensuring that they act in the best interest of their clients over the long term.
“The concept of asset managers’ fiduciary duty is already aligned with sustainable and responsible investment.”
Voss added that it is essential that the EU does not restrict the investment universe available for European asset managers.
Earlier this week, the European Fund and Asset Management Association said that any assumption that asset managers do not systematically consider sustainability when making investment decisions was incorrect.
The pan-European trade body for the asset management industry said that, while it supported the overall aim of promoting sustainable investment, enshrining requirements of asset managers in law could turn environmental and social governance investments into a tick-box exercise.
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