Asset managers should brace for tighter ESG , AI …

Asset managers should brace for tighter ESG , AI scrutiny , firm warns

KPMG s analysis reveals that global asset managers must prepare for stricter anti-greenwashing measures and increased scrutiny of AI adoption. The UK is leading in implementing anti-greenwashing rules and sustainability reporting, with Australia expected to follow suit, particularly in tightening ESG-related regulations. The Australian Securities and Investments Commission (ASIC) is focusing on market integrity and has taken action against misleading conduct. However, Australia lags behind in developing frameworks for entity-level disclosures and anti-greenwashing rules. The Albanese government has passed legislation to establish Australia s climate risk disclosure framework, introducing standardized reporting requirements for businesses. Australia is also developing a sustainable taxonomy, encouraging local asset managers to define sustainability for themselves. Asset managers worldwide are facing new reporting requirements to enhance transparency around corporate sustainability credentials. The International Sustainability Standards Board (ISSB) has finalized International Financial Reporting Standards (IFRS) S1 and S2, setting out general requirements for sustainability-related financial information and climate-related disclosures. However, adoption varies across jurisdictions, with Australia still finalizing an implementation timeline. Regulators are prioritizing AI and digital technology, but the pace of change varies between jurisdictions, creating challenges for global asset managers. ASIC has highlighted its growing focus on AI, emphasizing that existing laws apply equally to AI and non-AI systems. Asset managers should review how new technologies integrate with existing architecture and assess new risks. The opportunity lies in building strong foundations for regulatory compliance going forward. Piers Bolger, chief investment officer of Infinity Capital Solutions, acknowledges the challenges of regulating AI due to its wide scope and varying perceptions. Regulatory guidance would require agencies like ASIC to form a solid view on the technology before establishing a framework. In summary, asset managers globally must adapt to stricter anti-greenwashing measures and increased scrutiny of AI adoption. The UK is leading the way in implementing these measures, with Australia expected to follow suit

Source: investordaily.com.au
Published on 2024-09-28

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