Are environmental, social and governance concerns truly changing the asset management industry? Yes, and a lot, to judge by Jarkko Syyrilä’s keynote on regulation at PostTrade 360 Copenhagen.
Jarkko Syyrilä, who is head of public affairs with Nordea Asset and Wealth Management, warned strongly against thinking of ESG aspects as just marketing lingo.
He pointed to determined action being taken by the EU, including concrete tools like a taxonomy of what is meant by sustainability in various areas, development of sustainability benchmarks, clarification of asset manager duties, and rules for financial advisors.
“This is a major change and the next commission and parliament will take it even further,” said Jarkko Syyrilä, pointing to the imminent European Parliament election.
Major legislation is just a small part of it
Jarkko Syyrilä’s observations in the ESG area were made in the context of current regulatory trends overall. A lot of attention is drawn to the highest level of regulation – called level 1, including EU directives – but Jarkko Syyrilä refers to that as “just the tip of the iceberg”.
”You also have the implementing rules at level 2 – and then level 3 where European supervisory agencies like ESMA publish new questions and answers. Almost every week or every day there is something substantially new. So compliance and legal departments need to keep an eye all the time on the regulators’ websites.”
Brexit will keep causing uncertainty
Among the several other drivers in the fund and post-trade industries, Jarkko Syyrilä naturally dwelled on the Brexit issue. (In hindsight it stands clear that his presentation was given just the day before British prime minister Theresa May declared that she would resign.
”Nobody knows whether Brexit will go through, but what is clear is that this uncertainty will continue for long,” said Jarkko Syyrilä.
“But it has been a big issue for the industry to prepare for, given that so much of the European capital markets is centralised in London. So for the asset managers it is not only the issue of marketing products in the UK, but that so much of the derivatives clearing and the [post-trade industry] business of you guys Europe-wide is somehow connected to London: clearing, settlement and so forth,” he continued.
“Now the question is how we can link to there after Brexit.”
The full agenda of the 22–23 May PostTrade 360 Copenhagen conference, which attracted 160 delagates, can be found here.