Investors need to prepare themselves for the Environmental, Social, and Governance (ESG) regulations that are about to come into effect in the United States. ESG objectives have become a central part of conversations worldwide. Institutional investors must ensure that their net-zero promises and commitments to green energy are backed up by accurate reporting to prevent regulatory consequences. Regulators in Europe, such as the EU and U.K., have implemented guidance for disclosure requirements. The SEC will introduce their overarching disclosure guidelines at the end of this year, requiring companies to disclose detailed data regarding their sustainability strategies, such as their supply chain’s impact. Investors must adhere to the upcoming regulations, and the following tactics will help them get started:
1. Review European regulation guidance.
2. Cleanly communicate ESG goals to investors.
3. Utilize scalable technology for aggregration and normalization.
4. Employ technologies such as blockchain to measure ESG risks.
Although ESG regulations are relatively new in the U.S., organizations must ensure they are compliant. Late adopters of the regulations who do not follow the best practices could face repercussions. Organisations can build an ESG and data strategy across all business functions by looking at the European regulations, helping improve corporate governance.
The person mentioned in this article is the SEC, who will be introducing their ESG disclosure rules later this year.
The company mentioned in this article is PwC, which produced research indicating that ESG-related assets under management would reach almost $34 trillion by 2026.
