ESG Investing Exposed — The Future of Data

While definitions vary regarding the form of consideration of Environmental, Social, and Governance (ESG) risks, broadly speaking, ESG investing is an approach that seeks to incorporate ESG factors into asset allocation and risk decisions, so as to generate sustainable, long-term financial returns

The extent to which the ESG approach incorporates forward-looking non-financial material information into expectations of returns and risks, and the extent to which it can help generate superior long-term returns is important, to stop the mispricing of risk versus returns. A stumbling block for asset managers is being able to source reliable sustainability data both from and about the companies they invest in. If they have relied on something that is not accurate this could inadvertently lead to claims of greenwashing further down the line. So whether you are preparing or reviewing ESG disclosures for compliance with regulatory requirements or for alignment with ESG best practices, in this article we take a closer look at recent disclosure proposals originating from Hong Kong, compared to a variety of proposals elsewhere, along with the proposed EU regulatory treatment of data provision.

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