The capital market is undergoing transformation on multiple levels. The ecological sustainability of investments has become a key category for legislators.

Investors, including institutional investors, are increasingly focusing on sustainable investments. As early as 2021, Bloomberg estimated that global ESG assets could grow to over $50 trillion by 2025. This would represent one-third of the projected total assets managed worldwide.

This development is accompanied by new regulatory requirements. With the “EU Action Plan for Financing Sustainable Growth,” the European Commission has introduced a comprehensive package of measures with the declared objective of directing capital flows into sustainable investments, improving the management of climate risks, and promoting transparency and long-term orientation in capital markets. The capital market is considered a pivotal instrument for realizing self-imposed climate objectives.

In implementing the action plan, the European Union has addressed several financial market participants with multiple regulations. For example, the Taxonomy Regulation has introduced a framework for assessing the ecological sustainability of financial instruments. The Disclosure Regulation governs sustainability-related disclosure obligations for financial market participants and financial advisors. The new Benchmark Regulation adds two ESG-related benchmarks. The Capital Requirements Regulation obligates large credit institutions that have issued securities to disclose information on ESG risks. Legislators remain very active and plan to introduce additional regulatory regimes in the near future.

Focus Areas

  • Benchmark Regulation
  • EU Action Plan for Financing Sustainable Growth
  • EU Taxonomy Regulation – Regulation (EU) 2020/852
  • Green Finance, Sustainable Finance
  • Impact Investing
  • Capital Requirements Regulation – Regulation (EU) 2019/876 (CRR)
  • Disclosure Regulation – Regulation (EU) 2019/2088 (Sustainable Finance Disclosure Regulation (SFDR))
  • Shareholder Activism
  • SRI (Socially Responsible Investment)
  • Taxonomy