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EU watchdog monitors surge of cash going into biodiversity funds

By illuminem briefings 🌎

Sep 02 2023 Β· 1 min read

Illuminem Voices
Sustainable FinanceΒ Β·Β ESGΒ Β·Β illuminemX

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πŸ—žοΈ Driving the news: The European Union's securities regulator, ESMA, points out the rapid influx of investments into biodiversity funds as the new phase in ESG (environment, social, and governance) investing, emphasizing the importance of monitoring to prevent greenwashing

πŸ”­ The context: Biodiversity investments present unique challenges due to their complex nature
• As they focus on multiple living organisms, establishing standardized metrics becomes tricky

🌎 Why does it matter for the planet: As understanding and public awareness about biodiversity risks grow, there's an anticipated surge in biodiversity-related financial products
• This implies that they'll play a significant role in sustainable investing in the coming years, making oversight crucial

⏭️ What's next: ESMA warns of possible greenwashing in the EU's sustainable product sector 
• Consequently, regulatory oversight has prompted asset managers to reassess and reclassify over 300 funds based on sustainability goals

πŸ’¬ One quote: "Maintaining an environment of trust is of particular concern to ESMA. In this context, attention must be paid to the risk of greenwashing, as the EU market for sustainable products continues to grow at a robust pace" (Verena Ross, ESMA Chair)

πŸ“ˆ One stat: Over the past two years leading up to June 2023, biodiversity funds saw an inflow of 854 million euros ($931 million), with 73% of these funds being introduced since 2022

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