In brief
A series of briefings that take a bite-size look at international trends in different jurisdictions, drawing on Baker McKenzie’s expert financial services practitioners with local market knowledge.
This edition takes a bite-size look at the latest environment, social and governance (ESG) developments in Brazil, the European Union, Belgium, Hong Kong SAR, Japan, Singapore, Thailand, and the United Kingdom.
Key takeaways
Since we looked at ESG in our July 2021 edition, significant progress has been made internationally on creating a regulatory framework.
- As was the case then, there are still widely different rates of progress, but international standards are now firmly entrenched and many jurisdictions besides the EU have either enacted compulsory rules on reporting and disclosure or are in the process of doing so.
- We are now seeing actual implementation and firms dealing with the complexities, such as over how green to label funds.
- Other areas coming to the fore include a focus on the quality of ESG data from corporates on which financial institutions rely to make their disclosures.
- That said, leaders in the financial sector are without doubt most concerned about the risk of litigation and enforcement action arising out of allegations of green washing. Terms such as “green hushing” and “green bleaching” have emerged where businesses choose to remain silent about or downplay their firms’ or products’ ESG attributes. The US, where regulation is enforcement-led, is out in front but other jurisdictions are starting to see cases being brought.
- While ESG potentially brings financial institutions opportunities to grow their business, the risks require careful governance and management.
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Author
Benja Supannakul
Benja is a partner in the Bangkok office of Baker McKenzie. She joined Baker McKenzie in 2001 and is specialized in the areas of financial products including but not limited to derivatives, structured products, structured finance, wealth management, private banking, fund management and debt capital market, especially in regard to the regulatory matters. She has been also acting as a Thai legal counsel for ISDA Association and regularly advises international banks, capital markets intermediaries, fund managers, insurance companies and other financial institutions on financial services compliance and regulatory matters. She has been recognized by several of the world's leading legal directories.
Author
Caitlin McErlane
Caitlin McErlane is a partner in Baker McKenzie’s Financial Services & Regulatory Group in the London office.
Caitlin's practice focuses on advising a range of global financial institutions on complex and high value regulatory matters. She advises banks, major corporates, payment institutions and asset managers on navigating UK and EU financial services regulation. She has particular experience in advising clients on regulatory implementation projects, day-to-day compliance issues, and regulatory issues arising in the context of large-scale transactions. She also expertise in the areas of banking and wholesale financial markets regulation, in particular in the FX and fixed income space, alongside experience advising market infrastructure providers, including major international exchanges, trading platforms, clearing systems and payment services providers, on a variety of compliance issues.
Caitlin is also a member of the Baker's ESG and sustainability taskforce, and advises a range of clients on the drafting and implementation of ESG policies and the implications of becoming a signatory to the UNPRI and the Stewardship Code. Caitlin is an authority on regulatory reforms in the sustainability space and sits on a number of trade association working groups. She has recently been interviewed by Climate Action on her work and is a frequent speaker on the subject.
Author
Shaneil Shah
Shaneil Shah is a senior associate in the Financial Services Regulatory Group in the London office.
Shaneil provides strategic regulatory advice to clients across the regulated sector, with a particular focus on the regulations applicable to fund managers, investment firms, market infrastructure, banks and insurers. He advises clients throughout their regulatory lifecycle, from pre-authorisation, through to business expansion and on responding to new regulatory developments. Shaneil also advises on contentious matters, including investigations and enforcement proceedings brought by financial regulators, internal regulatory investigations and financial services disputes.
Shaneil has particular experience advising clients on complex regulatory implementation projects, and has worked closely with a number of asset managers to launch novel products for both retail and wholesale investors. He also advises a wide range of clients on developments in ESG regulations, including the EU’s SFDR and Taxonomy Regulations and the UK’s ESG regime.
Shaneil has undertaken secondments to the London branch of a global investment bank (focusing on contentious matters) and to Baker McKenzie in Hong Kong.
