ESG has never been more popular, yet regulation is still fractured and siloed across geographies. While there are (at least) 13 voluntary codes, there are currently no universal standards for how companies measure ESG.
Data vendors have wildly different ESG ratings for the same companies and many of their claims just don’t stand up to sensible analysis. Now the Biden administration is poised to tighten ESG disclosure requirements while the EU is rolling out a series of mandatory ESG obligations.
Transparency and data reporting will become a global issue. The funds industry needs to prepare for a step-change towards mandatory regulation or risk losing the goodwill of our investors.