EFAMA calls for Europe-wide regulation of ESG data and research

Pedro Gonçalves
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EFAMA calls for Europe-wide regulation of ESG data and research

The European Fund and Asset Management Association (EFAMA) is calling for a European regulation of ESG data, research and ratings, in part to stamp out greenwashing.

The trade body said third-party ESG data and research are "often inconsistent", with the methodologies used to gather and process data "lack[ing] transparency."

EFAMA is calling on the European Commission to develop a European regulatory framework for providers of ESG data, research and ratings, in line with the recent joint call from the French and Dutch financial market authorities.

Asset managers are heavily reliant on the information from third-party providers of ESG data, research and ratings, which comes with high costs and many questions."

Giorgio Botta, EFAMA regulatory policy advisor, said: "Asset managers wish to encourage this ESG investment trend by expanding their offering of sustainable products and by providing investors with trustworthy and comparable information - also in response to EU regulation introduced to fight greenwashing and enhance transparency.

"To fulfil these objectives, investors need solid and reliable data. Given the lack of publicly available information, asset managers are heavily reliant on the information from third-party providers of ESG data, research and ratings, which comes with high costs and many questions."

The Autorité des Marchés Financiers (AMF) and the Autoriteit Financiële Markten (AFM) proposed a regulatory framework, which they said would also prevent misallocation of investments and ensure investor protection.

EFAMA said more transparency would enable asset managers to ascertain that the information provided can be safely relied on in the context of their investment and product development strategies.

"To preserve market integrity, rules aimed at identifying and managing potential conflicts of interest are needed," it added.

This article was first published by our sister title Investment Week