European Commission Consultation on Institutional Investors and Asset Managers’ Duties Regarding Sustainability

13 November 2017

On 13 November 2017 the European Commission launched a Consultation on Institutional Investors and Asset Managers’ Duties regarding Sustainability (available here).

This Consultation forms part of the eight early recommendations put forward in the Interim Report by the European Commission’s High Level Expert Group on Sustainable Finance (available here), and which recommended the European Commission to clarify that the fiduciary duties (duties of loyalty and prudence) of institutional investors and asset managers explicitly integrate material environmental, social and governance (ESG) factors, and long-term sustainability. This, in turn, would help them allocate capital more efficiently by taking into account sustainability risks, rather than merely seeking to maximise short-term financial returns.

The aim of the Consultation is to collect market feedback in order to inform the impact assessment process. The Consultation is open until 22 January 2018.

The Consultation also forms part of the European Commission’s efforts to mobilise private capital towards green and sustainable investments to enable the transition to a low-carbon economy and shows the EU’s strong commitment to mitigate risks posed by climate change and environmental challenges. The Consultation further underlines the EU’s commitment to the Paris Climate Agreement and the UN 2030 Agenda for Sustainable Development.

As announced in its 2018 Work Programme, the European Commission will adopt an Action Plan on sustainable finance in the first quarter of 2018.