Environmental, Social, and Governance Investing Considerations in the U.S. and the EU

ESG investing appears to be increasingly popular in the U.S., with investment advisers introducing new ESG-related products and modifying existing investment strategies to include ESG-elements. In this article, the authors begin by giving an overview of factors in an ESG-approach, and existing standards and frameworks. They then discuss the U.S. regulatory framework, focusing on the Advisers Act, the Investment Company Act, and ERISA. Next, they turn to the EU regulatory framework, addressing new EU regulations and other ESG-related legislative activity in the past two years. They close reminding asset managers of the need to develop a clear internal view of the ESG investment process.