Navigating Sustainability Challenges as a Fund Manager: Insights from ISEC’s Head of Sustainability
What sustainability challenges do fund managers face today? Armin Manouchehr shares insights into how fund managers can navigate and adapt their ESG strategy.
By: Victoria Friman, Armin Manouchehr
Meet our Head of Sustainability, Armin Manouchehr, who shares his insights into how fund managers can navigate sustainability challenges and adapt to the future ESG landscape.
Fund managers today face several sustainability challenges. From rapid changes in regulations and management of ESG data, to navigating the current political landscape. By offering services in sustainability, Armin supports fund managers with expertise in sustainability strategy and reporting by ensuring regulatory compliance in their sustainability efforts. As regulatory authorities tighten their sustainability requirements, he assists fund companies with compliance and auditing to ensure they meet their sustainability commitments.
What are the biggest sustainability challenges fund managers face today?
1. Rapid change in sustainability regulations and directives
Over the past year, we have seen new guidelines and regulations regarding ESG ratings, green bonds, fund names and, not least, theOmnibus proposal. Additionally, proposals have been made for changes to the SFDR regulation, which is the directive that affects fund companies the most. These changes create challenges to navigate the new directives in an already complex landscape of existing regulations, which can be very resource intensive.
2. Challenge in managing ESG data
Accurate and reliable ESG data is crucial for correct reporting and decision-making. However, this data has historically been inconsistent or incomplete to verify between different providers. This may create confusion for fund managers in choosing the right provider and standard.
3. Change in political landscape
Political challenges significantly impact sustainability standards. Political instability and varying regulatory frameworks across jurisdictions create uncertainty and hinder consistent sustainability practices. Hesitation and lobbying by interest groups can delay or weaken stringent regulations. These dynamics add complexity to fund managers and companies striving to comply with evolving standards.
How can fund managers navigate these changes and adapt their fund strategies?
In my work, I find that fund companies often have ambitious sustainability efforts already in place, but they choose to classify themselves at a lower sustainability level. This can be due to a cautious approach to navigating sustainability regulations and the required reporting.ISEC supports the more demanding aspects of ESG, such as reporting and navigating both new and existing directives.
I believe that the financial industry generally has a cautious approach when it comes to sustainability, as fund managers want to avoid potential risks that may arise from stricter sustainability requirements. This is reflected in the challenges that exist and how proactive and dynamic sustainability still is. Hopefully, this will mature in the coming years and lead to less uncertainty around regulations – where sustainability takes a more prominent part of corporate strategy.
I believe that the financial industry generally has a cautious approach when it comes to sustainability, as fund managers want to avoid potential risks that may arise from stricter requirements. This is reflected in the challenges that exist and how proactive and dynamic sustainability still is.
Armin Manouchehr
Head of Sustainability
Driving sustainable growth in financial services
At ISEC, sustainability is an important aspect of our continued business growth. We are committed to the success of all our stakeholders, and we operate our business sustainably and responsibly. We have the ambition to start reporting according to the CSRD directive, which requires extensive work on our sustainability strategy.
Our Management Company,ISEC ManCo Services,places great importance on ensuring that our developed sustainability processes are followed to ensure regulatory compliance. We continuously review our funds to ensure that the sustainability goals and criteria established for each fund are adhered to. Given our diverse range of funds, it is crucial to have a systematic process that can be applied to all funds. This work is carried out in close collaboration and dialogue with the fund managers.
Sustainability Consulting
ISEC assists fund managers with sustainable finance through our business area, Sustainability Consulting. This involves helping fund companies becoming regulatory compliant, develop policy documents, and hold workshops on the implementation of SFDR for employees and managers.
