Welcome to
the Arabesque
ESG Regulatory
Resource Hub

Your key to staying competitive
in an ever-evolving ESG data

Sustainable finance policy and regulations are a 21st Century Phenomenon and will continue to increase in the coming years.

The growing ESG Regulatory landscape is one of the main drivers behind the harmonization of ESG data, as well as a key driver behind corporate transparency.

Across the world’s 50 largest economies, the PRI finds that there have been over 730 hard and soft law policy revisions, across some 500 policy instruments, which support, encourage or require investors to consider long-term value drivers, including ESG factors. Of these top 50 economies, 48 have some form of policy designed to help investors consider sustainability risks, opportunities or outcomes.


Systemic Drivers in the Growth of Sustainable Finance Regulations

  • Sustainability Linked to Financial System and Investment Portfolios

    Sustainable finance issues can have a profound impact on the stability of the financial system (for example, climate change, as well as emerging issues such as biodiversity and circular economy), or on the risks to an individual investor’s portfolio.

  • Sustainability Product Standards & Consumer Protection

    New “ESG” or “Climate” investment products claiming environmental and social benefits have implications for consumer protection. Policymakers are responding to the need to clarify terminologies, overcome resource and information disadvantage, avoid “greenwashing”, create efficiencies and introduce minimum standards.

  • Financial System Linked to Collective Goals

    National policymakers also increasingly recognise that decisions made in the financial system influence the sustainability of the local real economy and may even undermine progress towards their collective environmental and social goals.


EU Spotlight

The EU Action Plan on Sustainable Finance serves as a unifying framework for sustainable investing in Europe

On 7 March 2018, the European Commission released an action plan for financing sustainable growth. The plan is a response to recommendations from the High-Level Expert Group (HLEG) on Sustainable Finance, which were submitted to the Commission on 31 January 2018.

Arabesque is currently building a range of ESG data and reporting solutions to meet growing EU regulatory requirements and increasing client demand.

The Action Plan outlines ten reforms in three areas:

  1. Reorient Capital Flows Towards Sustainable Investment
    • Establishing an EU classification system for sustainability activities
    • Creating standards and labels for green financial products
    • Fostering investment in sustainable projects
    • Incorporating sustainability when providing investment advice
    • Developing sustainability benchmarks
  2. Mainstreaming Sustainability into Risk Management
    • Better integrating sustainability in ratings and research
    • Clarifying institutional investors and asset managers’ duties
    • Incorporating sustainability in prudential requirements
  3. Foster Transparency and Long-Termism in Financial and Economic Activity
    • Strengthening sustainability disclosure and accounting rule-making
    • Fostering sustainable corporate governance and attenuating short-termism in capital markets
  • EU Taxonomy

    A proposal for a regulation to establish a framework to facilitate sustainable investment. The proposed regulation establishes the conditions and the framework to create, over time, a unified classification system (or taxonomy) on what can be considered environmentally sustainable economic activities. This is widely seen as a first and essential enabling step in the overall effort to channel investments into sustainable activities.

  • Disclosure and duties

    EU Disclosure Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector. The regulation sets out harmonised rules for how financial firms and advisers should report on how their processes take account of sustainability risks and adverse sustainability impacts, as well as the way in which they communicate sustainability-related information about their products. The Disclosure Regulation entered into force on 29 December and will apply from 10 March 2021.

  • Benchmarks

    The low-carbon benchmarks regulation was published in November 2019, amending the benchmark regulation. The amendment creates a new category of benchmarks, comprising low-carbon and positive carbon impact benchmarks, to help investors better understand the relative carbon impact of their investments.

  • Corporates

    The Non-Financial Reporting Directive (NFRD). The NFRD requires companies above a certain size to include a nonfinancial statement as part of their annual public reporting obligations. It is applicable to large Public Interest Entities with more than 500 employees. Companies have to disclose information about their business model, policies (including implemented due diligence processes), outcomes, risks and risk management (including risks linked to their business relationships), and KPIs relevant to the business.

  • Sustainability Preferences (consultation)

    In addition, ESMA solicited feedback on amendments to delegated acts under the Markets in Financial Instruments Directive (MiFID II) and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors offer to their clients.

  • Lending

    The EU Banking supervisory authorities (ECB and EBA) are issuing guidelines on the integration of ESG and climate risk into risk management and risk governance processes for lending institutions.