Asset managers around the world should prepare for tightening anti-greenwashing measures, as well as increased regulation around AI and digital technology, according to KPMG’s latest Evolving Asset Management Regulation report.
The report showed that the UK had the tightest regulation on anti-greenwashing as well as entity-level sustainability reporting. KPMG Superannuation Advisory lead Dr Lisa Butler-Beatty said Australia is likely to follow the UK’s lead in tightening ESG-related rules, after the climate-related disclosure regulation was brought in.
“The prevention and mitigation of greenwashing remains a regulatory priority globally, as governments look to increase transparency to investors,” she said.
“Asset managers should be prepared for the ongoing expansion of economy-wide ESG reporting going forward.”
Over the last four years, many countries have introduced new regulations. More recently, we have seen a shift from policymaking to supervision, with rules being amended to reflect the feedback and experience of asset managers.
KPMG Global ESG Asset Management Lead Geri McMahon said while the sustainable finance taxonomies are being developed in each country, the onus on each asset manager would be to define then what sustainable means for them.
“A sustainable finance taxonomy establishes definitions for green and transition finance, enhancing consistency,” Ms McMahon said.
Regulators globally have their sights set on AI and digital technology regulation, the report found, though the rules and pace of change varied greatly between jurisdictions, creating challenges for global asset managers to reap the benefits of new technology.
“Asset managers should focus on reviewing how the new technologies will work with existing architecture, and what the new risks are,” Dr Butler Beatty said.
“The opportunity is now for companies to start building strong foundations for regulatory compliance going forward.”
Access the full report here.
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