Terms of Reference for ESG Forum
Click on image to view the draft terms of reference for the ESG Forum. These terms of reference have been constructed by the forum co-chairs but will be reviewed by the forum members and amended as required.
ESG is currently a hot topic which has challenges for Investors, the Capital Markets ecosystem, and Issuers. The momentum continues to grow worldwide as the effective communication of the concept, plus its benefits, is sparking a behavioural shift in investor strategies.
ESG continues to be a catalyst for change on many fronts as issuers need to ensure they are meeting the expectations of ethical investors across multiple disciplines, due to the significant investment that ESG attracts. Wealth managers and issuers are both aware of the competitiveness of protecting their business.
There are hundreds of reporting provisions globally, which are open to interpretation of what constitutes as sustainable V’s what is not. Also concerns are growing among Regulators and authorities around Greenwashing with firms making misleading claims about ESG credentials.
Transparency should be improved as ESG calculations used by rating agencies are complex to understand, have a large range of variencies and as such are difficult for investors to have a true understanding of. Increased transparency will encourage investors to exercise their shareholder rights.
The lack of standardisation and interoperability marks a significant challenge for financial institutions globally, which is having a knock-on effect on the businesses looking for investment.
The working group primary objective is to highlight the main risks and challenges faced by the financial intermediaries from issuer to end investor. This will be achieved by collaborating with different industry players including issuers, regulators and intermediaries including banks and brokers servicing investors assets.
As a result of meetings, question and answer sessions, consultations and open discussions, the group will analyse issues and market challenges and share findings, issue a white paper, make recommendations for change and industry best practice whilst endeavouring to pull the financial community together for an aligned approach to ESG.
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