New research by responsible investment campaigning group Share Action reveals that while some of Europe’s largest asset managers are making progress with their sustainability disclosures, many still fall short of providing information on how they manage the negative environmental and social impacts of their investments.
The research assessed how 30 leading asset managers based in, or operating within, the EU, disclose their engagement and due diligence practices under the EU’s Sustainable Finance Disclosure Regulation (SFDR) – which is up for review by the European Commission later this year.
Despite some encouraging signs and examples of good practice, SFDR disclosures remain patchy and inconsistent, warns Share Action.
Many asset managers provide only vague explanations about how they act on the negative ESG impacts of their investments, and how they engage with companies are falling behind, said the campaigning group.
This lack of clarity leaves investors in the dark, argue the group, which undermines the core goal of SFDR: which is to equip investors with the information they need to make decisions to facilitate the transition to a sustainable economy.
Isabella Ritter, senior EU policy officer at Share Action, said the SFDR was meant to “lift the lid” on how financial actors manage the sustainability impacts of their investments.
“While some assets managers are leading the way with strong disclosure practice, too many still rely on general language and fail to explain which harms they’re addressing or what they do when companies they invest in don’t improve,” she said.
Ritter added: “Our findings show that credible, clear disclosures are possible – but they are still far from the norm. The framework must empower end investors and consumers to spot greenwashing, identify truly sustainable products, and direct their money towards supporting the EU’s green and social goals.”
Ritter continued “Too often, asset managers make sustainability claims without showing how they plan to deliver on them. That’s why we focused on engagement disclosures – to examine which concrete actions they take with investee companies to address the negative impacts of their investments.”
As the European Commission prepares to review the SFDR framework, Share Action has urged EU policymakers to use the opportunity to enhance the regulation so that it can fully meet its objectives.
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