McDermott Comment | Asset Managers In Firing Line As Sunak Unveils New Greenwashing Rules
Ranajoy Basu, partner at law firm McDermott Will & Emery, said:
“In the EU, the impetus has clearly grown from the EU Sustainable Finance Action Plan and remains on the top of the regulatory agenda. The most significant developments have been the Sustainable Finance Disclosure Regulation (SFDR) and the Taxonomy Regulation that impact Financial Market Participants, which includes, amongst others, AIFMs, UCITS ManCos, Portfolio Managers/Advisors in relation to Financial Products.
While neither the SFDR nor the Taxonomy Regulation were on-shored in the UK as a piece of existing EU legislation following the end of the Brexit transition period, it is now clear that the UK’s position will diverge from the EU’s. Notwithstanding the divergence, the UK government has stated that ‘at the very least, we will match the ambition of the EU Sustainable Finance Action Plan.’
Following the UK Government’s recent comments, it will be important to monitor the next phase of development in terms of how new regulations in the UK will harmonise with the EU legislation in creating a consistent approach towards disclosure standards. The hallmark of ESG transactions has been the opportunities presented to both private and the public sector to collaborate. This is a critical time for market participants, regulatory and the legal sector to collaborate together to catalyse further growth in the ESG sector, while mitigating the risks of ‘green washing’ and related concerns through a clear disclosure standard that will also need to be balanced to ensure that such rules are not too restrictive.”