Can new EU regulation finally tackle greenwashing in real estate?
As funds now have to give detailed assessments of their sustainability ranking, the days of paying lip service are over.
By Ami Kotecha, Co-Founder and President of Amro Partners
Few can argue against the urgent need for transparency and accountability when it comes to ESG-related claims. As of January 2023, regulations came into force under the EU’s SFDR (Sustainable Finance Disclosure Regulation) requiring financial market participants, including real estate funds, to file quarterly reports outlining their ESG performance against precise and transparent sustainability goals.
Funds must explain both how they will integrate sustainability risks into investment decisions – and the true impact of these decisions on the environment and on social outcomes. Instead of relying on vague sustainability reports that pay lip service while continuing ‘business as usual’, investors will be armed with the real information allowing them to confidently assess those funds that are genuinely aligned with their values.
The first reports are due on 30 June this year – a mere three months away. SFDR applies to any financial market participants marketing their products in the EU, so UK companies cannot look away. The UK is also responding with its own SDR (Sustainability Disclosure Requirements) Framework, currently under consultation.
