Three ESG considerations for marketing funds in Europe

One area which can be easy to overlook for overseas managers, at least initially, is ESG. Recent Ocorian research found that almost all (98%) alternative asset managers agree that it will become harder to launch new funds unless they have a strong ESG focus. That’s particularly true in Europe, where ESG is an especially big deal.

Three things you need to know about ESG investing in Europe:

1. ESG is heavily regulated

There are a number of ESG regulations impacting alternative fund management in the EU. The most obvious is the EU's Sustainable Finance Disclosures Regulation (SFDR), which imposes mandatory ESG reporting requirements on asset managers. Others to be aware of include the Corporate Sustainability Reporting Directive (CSRD), which covers funds and the assets in their portfolios, and the EU Taxonomy and the UK's Sustainable Disclosure Requirements (SDR), which sets out the criteria for judging the sustainability of business activities.

2. And it is getting more so…

The regulatory landscape around ESG is continually evolving, which can lead to some confusion and makes it a challenge to keep up. To take one example, additional CSRD reporting standards come into effect in January 2024, with more to come in 2025, 2026 and 2028. Fund managers thus need to keep one eye on the regulatory horizon at all times. 

3. Many European investors have a preference for green funds

Article 8 and Article 9 are EU labels denoting light or dark green funds (dark being more sustainable). These are increasingly attractive to EU investors with their own ESG targets to meet, but even US managers who don’t intend to market green funds need to take investor sentiment into account. Managers looking to raise capital in Europe should be aware that ESG is an increasingly important factor in investor decision making.

Download ‘A guide to raising capital in Europe’

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Ocorian Fund Services

At Ocorian we have extensive experience supporting US fund managers with setting up alternative investment funds in Europe and administering them throughout their lifecycle.

We have teams across seven jurisdictions in Europe that provide a high touch, technology first approach combined with local expertise.

We offer a full service offering from fund set up and administration through to fund accounting, AIFM, investor services and depositary.

• Fast and efficient set up of funds in Europe
• Teams based in the UK, Jersey, Guernsey, Ireland, The Netherlands and Luxembourg
• AIFM in Ireland and Luxembourg
• Expertise in administering vehicles parallel to existing US or Cayman structures
• Jurisdiction agnostic
• Full service provider

Our business development team in the US will be happy to discuss your European requirements and guide you through the process. Contact us for more information.