Photo by Håkan Dahlström from Flickr
The European Commission is anticipated to reveal two new updates to its plan on the Capital Markets Union (CMU) over the coming days, addressing the sustainability and cross-border access to investment funds.
On Thursday, the commission is scheduled to disclose its plan in response to a new report on financing a sustainable European economy.
The report is written by the EU High-Level Group on Sustainable Finance. It recommended actions that include clarifying investor duties to establish a greater focus on environmental, social and governance (ESG) factors, improving opportunities for retail investors to place cash into sustainable finance opportunities including “green bonds”, and integrating sustainability in the governance of financial institutions.
Michael Collins, the chief executive of trade body Invest Europe, stated: “The private equity model of active management already makes it well-suited for responsible investment.
“Applying this in practice depends on the context and market segment, as ESG issues are broad, the industry is diverse and much decision making depends on the circumstances of the individual investment. With this in mind, any guidance that becomes legally binding will need to retain sufficient flexibility for funds of different shapes and sizes, to allow interpretation on a case-by-case basis.”
On Monday, an update regarding the cross-border distribution of investment funds is anticipated to be announced.
The said initiative is intended to make it easier for the investors to plough money into investment funds that are from other countries, improve the ng capital flow between the member states of the European Union.
According to some sources, it will comprise of the EU-wide venture capital marketing passports and alternative investment, and the framework which regulates the mutual funds of the European Union.
Anna Lekston of Invest Europe stated: “In Europe, 28 per cent of private equity fundraising is conducted cross-border, so we appreciate the Commission’s efforts to look at targeted ways to make it easier.”
However, she warned that “insufficiently tailored regulatory changes could hinder private equity managers’ fundraising activities.”