The impacts for manufacturers of financial products are spreading through the full value chain.
The regulator targets the inclusion of ESG-criteria in the investment approach. This will require fund managers (UCITS & AIF) to re-design their investment process and to gather additional data on their investment targets.
As such, the strategic business decisions for a manufacturer are limited to:
not adopting sustainable investment strategies or
to ringfence the new approach (i.e. limited number of dedicated products) or
to include the sustainability criteria as a baseline in all its portfolios and investment strategies.
Whatever the choice, all these changes will be subject to disclosure requirements starting March 2021 and subject to minimum technical criteria which define environmentally sustainable business activities, starting 2022/2023 (i.e. Taxonomy).
Practical challenges for manufacturers (not exhaustive):
- Strategy
- Disclosures
- Processes
- People & Organisation
- IT & Data
Strategy
- Definition of a “Sustainability Strategy” for the investment process and the firm at large
Disclosures
Website: Disclosure of certain elements of the sustainability strategy
- Pre-contractual:
- Disclosure of certain elements of the sustainability strategy
- Disclosure requirements w.r.t. Products (UCITS & AIFs)
Periodic disclosures: Disclosure requirements w.r.t. Products (UCITS & AIFs)
ESG product labelling
Processes
Incorporation of sustainability factors in the investment due diligence process
Implementation of the EU Taxonomy and the related technical screening criteria in order to determine which activities can be considered environmentally sustainable
Inclusion of ESG criteria in the manufacturer target market for the manufactured financial instruments
People & Organisation
Upskilling of all affected employees (incl. Management)
Need for SF / ESG specialists
Policy review and update
IT & Data
Responsible investing requires information on sustainability factors in the form of data that needs to be available in the IT systems
Selection of adequate data sources
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
