The European Commission is expected to announce two new updates to its Capital Markets Union (CMU) plan over the coming days, addressing sustainability and cross-border access to investment funds.
Tomorrow, the commission is set to announce its plan in response to a recent report on financing a sustainable European economy.
The report, written by the EU High-Level Group on Sustainable Finance, recommended actions such as clarifying investor duties to put a greater focus on environmental, social and governance (ESG) factors, boosting opportunities for retail investors to put cash into sustainable finance opportunities such as "green bonds", and integrating sustainability in the governance of financial institutions.
"The private equity model of active management already makes it well-suited for responsible investment," said the chief executive of trade body Invest Europe, Michael Collins.
"Applying this in practice depends on the context and market segment, as ESG issues are broad, the industry is diverse and much decision making depends on the circumstances of the individual investment. With this in mind, any guidance that becomes legally binding will need to retain sufficient flexibility for funds of different shapes and sizes, to allow interpretation on a case-by-case basis.”
Meanwhile, on Monday an update on the cross-border distribution of investment funds is expected.
This initiative is designed to make it easier for investors to plough money into investment funds from other countries, improving capital flow between EU member states.
According to sources, it will cover the EU-wide alternative investment and venture capital marketing passports, and the framework which regulates EU mutual funds.
“In Europe, 28 per cent of private equity fundraising is conducted cross-border, so we appreciate the Commission’s efforts to look at targeted ways to make it easier," said Invest Europe's Anna Lekston.
But, she warned, "insufficiently tailored regulatory changes could hinder private equity managers’ fundraising activities".