A new survey by IIMI, the boutique asset management think tank formerly known as New City Initiative (NCI), today reveals that over three quarters of its members believe they will benefit from complying with the European Union (EU)’s Sustainable Financial Disclosure Regulation (SFDR), which came into effect in March.
The full results of the survey, which was conducted among IIMI’s membership to gather their views on the SFDR and how it will impact their firms and the wider industry, are included in IIMI’s paper “Regulating ESG: A step in the right direction”, published today.
Other key highlights from the paper include:
- 61% of respondents believe that the SFDR will improve competition in the asset management industry, while 22% feel it will have a negative impact
- Some members feel the rules could disadvantage boutiques as the supplementary costs will be felt disproportionately
- Some members are calling on EU regulators to cap the amount which data providers can charge for ESG research and analytics, in order to create a more even playing field between boutiques and larger firms
- 66% of the membership have already integrated ESG work into their investment teams’ processes
- Over a quarter (27%) have decided to hire ESG specialists specifically to deal with the new regulations
- There is particular uncertainty around ‘Article 8’ designation, which IIMI is calling for clarification on
Nick Mottram, Chairman of the recently rebranded Independent Investment Management Initiative, commented:
“As scrutiny around ESG in asset management continues to grow, this research suggests our members largely believe SFDR can be a force for good in the industry. However, IIMI’s membership is diverse and there is a significant minority which believes the new rules will hamper competition, favouring the resource-rich, larger firms at the expense of smaller, independent, entrepreneurial firms. Additionally, there are reservations regarding uncertainties around Article 8 designation, and we do believe that these need to be clarified.
“IIMI fully supports the principles behind an ESG taxonomy as we believe that it will be vital in eliminating the risk of greenwashing, which is an issue of concern in the industry. We also can’t stress enough how important it is that ESG standards across major markets do not diverge excessively, so as to avoid unnecessary confusion.
“It also doesn’t surprise us that a number of members are calling for a cap on the amount which data providers can charge for ESG research and analytics so that they are not at a disadvantage to larger firms, as we have often seen boutiques be disproportionately impacted by the costs of complying with new regulations. Our members consistently rise to meet the challenges that the industry and investment markets throw at them, and there is no doubt that they will adapt and thrive as ESG becomes integral to the service that clients demand.
“ESG is very much the issue of the day and so it seems fitting for us to focus on this in our first paper under our new name, the Independent Investment Management Initiative, or IIMI for short. We have been going strong for over 10 years but felt it was time to choose a name that better encapsulates who we represent and what we stand for. Giving a voice to independent investment management firms over the future of financial regulation has always been at the heart of what we do, and we shall continue to promote the key role that our members, and all boutiques, play in preserving the stability and long-term focus of the financial sector at large.”
TB Cardew (PR adviser to IIMI) 020 7930 0777
Alycia MacAskill 07876 222 703
About Independent Investment Management Initiative (IIMI):
Independent Investment Management Initiative (IIMI), formerly New City Initiative (NCI), is a think tank that offers an independent, expert voice in the debate over the future of financial regulation. Founded in 2010, IIMI counts amongst its members some of the leading independent asset management firms in the City of London and the Continent. IIMI gives a voice to independent, owner-managed firms that are entirely focused on and aligned with the interests of their clients and investors. Over the last decade, an old fashioned “client-centric” approach has enabled entrepreneurial firms in the Square Mile and beyond to emerge as a growing force in a financial industry dominated by global financial giants. Now, more so than ever, these firms play a key role in preserving the stability and long-term focus of the financial sector, which is of benefit to society at large.
Today IIMI is comprised of 46 leading independent asset management firms from the UK and the Continent, managing approximately £500 billion and employing several thousand people. IIMI Singapore was launched in 2019.
- To serve as an independent, expert voice in the debate over financial reform;
- To restore society’s trust in the financial sector;
- To promote the values and practices of owner-managed firms which align their interests with those of their clients; and
- To raise awareness of the positive, stabilising contribution small entrepreneurial firms make to the economy and society as a whole.