Regulatory rollouts over the next 12 months are likely to be pivotal in setting the scene for the next stage of the ESG data and technology space as political attitudes towards sustainability diverge from the demands of investors.
Pushback against sustainability markets has already seen several regulatory codes, both implemented and proposed, watered down. At the same time, the data needs of institutions have become more pressing and complex as the impacts of climate change become apparent and clients call for greater sustainability options.Depending on the direction taken, the regulatory response to these developments have the capacity to either bolster sustainability markets or fundamentally weaken them. It’s a subject that will be among those discussed at A-Team Group’s ESG Data and Tech Summit London next month.
“Recent geopolitical developments have triggered a retrenchment in certain jurisdictions, most notably the UK and US, that could ultimately have normative consequences across the broader ESG landscape,” said Barrie Ingman, legal counsel, head of regulatory developments at Mizuho Bank.
Leading Figures
The third annual Summit takes place in London’s Canary Wharf on May 16 and will gather leading participants in sustainability markets from some of the world’s largest financial institutions. The summit is intended to take stock of where the data and tech sector stands at a time when ESG is being put under intense scrutiny.
Ingman will be among speakers at a panel discussion entitled “Regulator and User Panel: Navigating the Global ESG regulatory landscape”. He’ll be joined by Ali Adeli, ESG data and regulation portfolio manager at Janus Henderson, Mark Manning, principal advisor, regulatory affairs at IFRS Foundation and Sabine Dittrich, head of EU financial regulation at Slaughter & May, who will moderate the event.
The panel will also explore the impact of the UK’s exit from the European Union on the nation’s data source capabilities, the influence of the International Sustainability Standards Board and the likely fate of ESG ratings providers.
The summit will also include keynote speeches from leading practitioners in the ESG data space as well as fireside chats on artificial intelligence with Nirav Shah, head of ESG and quant technology, at J.P. Morgan Asset Management and on best practices for reporting with Hany Choueiri, board member at GLEIF.
Time of Change
The regulatory landscape is about to undergo further change. While the US recently unveiled its rule on climate reporting by financial institutions the measure has been stalled in the courts. In the UK, which is expected to announce further regulations in the summer, also is expected to rethink some of its proposals. The European Union already has done so with its Corporate Sustainability Due Diligence Directive (CSDDD), the scope of which has been substantially scale back following objections from large member states.
Ingman also pointed out that the prospect of a second Trump administration would undoubtedly lead to a markedly different approach compared with that of a Biden administration, with the Republican nominee making no secret of his antipathy toward environmental and ESG movements.
Nevertheless, the need for data will remain, Ingman told ESG Insight.
“Even though the ESG regulatory arena is currently characterised by non-linearity, pockets of retrenchment and overall fragmentation, these trends in no way alter the fact that overall, financial services firms still require more and better ESG data, and likewise improved technology to process this data to facilitate the execution of their regulatory risk management and ESG reporting obligations,” he said.
The EU has taken heed of this, he argued, with its recently published legislation that will bring ESG ratings providers under the gaze of regulators. This move has the potential to reshape the data market in Europe.
“The costs of complying with a new regulatory regime for ratings providers raises the prospect of a sectoral shake-out, has the capacity to trigger an exit of smaller vendors and thus the emergence of oligopolistic market dynamics that could stifle innovation and lead to additional unintended competitive distortions,” Ingman said. “As always with ESG regulation, it is a continuously evolving landscape that shows little sign of settling over the short-to medium horizon.”
- A-Team Group’s ESG Data and Tech Summit London will be held at Hilton Canary Wharf on May 16. There is still time to register for attendance. Just click here.
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