The CFA Institute has warned of "regulatory fatigue" after it conducted a survey of its EU members to find out to what extent environmental, social and governance (ESG) factors should be mandated in the investment process by the regulator.
The survey, The Evolving Future of ESG Integration in Investment Analysis, was prompted by the launch of the European Commission’s ‘Action Plan on Sustainable Finance’ and the results were published at the end of October this year.
Josina Kamerling, head of regulatory outreach for Emea at the CFA Institute, told FTAdviser: "It was felt very much with this ‘action plan’ that the EU Commission came out with that we needed to respond. Because the action plan has some very good ideas.
"However, they tend to be much more structured at a stage in the process...on what capital markets’ responsibilities are.
Post-Mifid, there is much more responsibility on product governance.Josina Kamerling"We are post-Mifid, there is enormous regulatory fatigue with asset managers, with banks, with pension funds. In my opinion, it falls in a period which is perhaps not quite the right moment."
She added: "We felt it was the right moment to come with a survey from our investment professionals who see it in a different way to companies and asset managers, and who see it also in a different way from policymakers."
The results showed little consensus from CFA charter holders on whether ESG factors should be incorporated into the investment process and become part of legal fiduciary duty.
She admitted the respondents were "quite divided" over wanting fiduciary duty and not wanting it.
According to the survey, 71 per cent of UK members who responded were opposed to the idea of a regulatory requirement for ESG factoring.
"It really shows the market is at a cusp, trying to figure out what are the new roles and duties," she said.
"Post-Mifid, there is much more responsibility on product governance. You feel the market is looking for new ways of engaging with companies, of being responsible to the ultimate investor and the ultimate asset owner.
"The [EU] Commission proposals come at a time when we need to have a wider debate."
Turning to Brexit, Ms Kamerling said the CFA Institute had carried out three Brexit surveys with its UK society, the last of which showed more of "a concern about a degradation of the market".
"A concern about what the impact might be post-Brexit," she added.
"But it also shows a concern of non-UK nationals about what it might be doing to their career and it shows that there are more reflections on should they be staying longer term in the UK or not."
Watch the full interview at the top of the page.
eleanor.duncan@ft.com
