Institutional investors
To date, institutional investors have the highest potential in terms of sustainable investing and provide the largest contribution to the growing demand for sustainable financial products and services.
The regulator targets the further inclusion of sustainability factors and risks in the investment process of institutional investors and the disclosure of such information to the end-investors.
The main strategic decisions for institutional investors are therefore related to:
deciding on pursuing sustainability objectives
- defining an appropriate responsible investment strategy and finding the right balance between financial objectives and impact orientation.
Practical challenges for institutional investors (not exhaustive):
- Strategy
- Disclosures
- Processes
- People & Organisation
- IT & Data
Strategy
Definition of own “Responsible Investment Strategy”
Definition of “Responsible Investment Strategy” in accordance with the preferences of the end-investors (beneficiaries)
Definition of clear ESG targets
Disclosures
Evaluation of disclosures and pre-trade documents provided (w.r.g.t. products)
Disclose how investments relate to the defined ESG targets
Investment managers - disclose ex-post periodically how ESG targets were reached
Processes
Provision of ESG preferences when compiling the investment objectives section of the suitability questionnaire
Integration of ESG-criteria into the investment decision making process
People & Organisation
Upskilling of all affected employees (incl. Management)
Need for SF / ESG specialists
Policy review and update
IT & Data
Implementation of control systems to monitor portfolio composition with regards to ESG-targets
Obtain ESG-information from data providers and incorporate in current data flow
Retail investors
In order to foster sustainable investment and in line with the upcoming regulatory requirements, retail investors will also be asked to disclose their ESG preferences as part of the suitability assessment carried out by financial instrument distributors and need to define their personal sustainable investment objectives. For this reason, retail investors should develop a good understanding of the current investment needs in order to define their own sustainable investment objectives and interpret ESG-data accordingly.
Contact us
Giuseppe Corsini
Assurance Partner, Capital Markets Leader and Sustainable Finance, PwC Luxembourg
Tel: +352 49 48 48 4957
Vincenzo Bruno
Assurance Director, Capital Markets and Sustainable Finance, PwC Luxembourg
Tel: +352 621 33 3409
