IEMA Provides comments on new BSI standard on responsible and sustainable investment management

In December 2019 BSI opened the draft Publicly Available Specification (PAS) 7341 on responsible and sustainable investment management for public comment by stakeholders. Following engagement with IEMA members, including a workshop with the IEMA GESA Group and the IEMA Fellows Working Group on Sustainable Finance, IEMA submitted its comments to BSI in March. Overall, IEMA welcomes the development of PAS 7341. As the second PAS in a series within BSI’s Sustainable Finance Standardization Programme, this PAS comes at a critical time when there is a need to ensure that the financial sector is better aligned towards tackling critical climate change and environmental challenges. Commenting on the draft, IEMA called for tighter drafting that includes additional focus on issues that are directly relevant to sustainable or responsible investment management, refining definitions for key concepts such as additionality and suggested new definition on issues such as stranded assets and divestment.

Posted on Mar 03, 2020

Earlier this year, IEMA publicised the fact that BSI had published the first in a series of Publicly Available Specifications in its Sustainable Finance Standardization Programme to help define globally applicable standards for the finance sector.

The standard, known as PAS 7340:2020 Framework for embedding the principles of sustainable finance in financial services organizations – Guide provides a framework for financial services organizations that wish to be sustainable and better aligned with global initiatives like the United Nation’s Sustainable Development Goals (UN SDGs) and the Paris Agreement.

As an active member of the steering group that is producing the series of standards, IEMA has consulted with members and key stakeholders with experience working on sustainability issues within the financial sector, to collect views on the second draft PAS in the Programme, PAS 7341 Responsible and sustainable investment management – Specification.

In its response to the draft PAS 7341, IEMA welcomed the development of PAS 7341. As the second PAS in the series, IEMA found that it closely follows and builds upon the common terminology and set of principles laid out in PAS 7340, to help organisations identify, develop and maximise opportunities that address sustainability challenges.

Providing critical feedback on several sections of the PAS, IEMA called on the need for PAS 7341 to make less extensive reference to PAS 7340 and suggested wording for additional sections on issues such as divestment, stranded assets and authenticity, which are directly relevant to sustainable or responsible investment management.

Pointing out that the current definition of additionality appeared to be limited to a financial sector view, IEMA found that sustainability should be applied in all its aspects (including reference to social sustainability) with appropriate and balanced consideration of environmental and social impacts, risks and issues.

IEMA called on BSI to tighten up the commitments required of investment firms noting that the use of non-prescriptive language within the PAS lent it to be interpreted as a guidance standard rather than a verifiable standard.

Finally, commenting on governance approaches to responsible and sustainable investment management, IEMA stressed the importance of tighter drafting that would specify the type of measurement approaches required. This would ensure organisations do not embed investment management practices that circumvent the objectives of the Task Force on Climate-related Financial Disclosures TCFD, science-based targets, and the Sustainable Development Goals.

To read the draft PAS 7341, please click here.

To read the IEMA response to PAS 7341 please click here.

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