Bringing managers and investors together to set standards for the alternative investment industry


At the SBAI, we support efforts to facilitate fair and efficient markets, and enable investors to make well-informed investment decisions. Accurate and timely disclosure of all types of risk, including ESG risks (where applicable), are a critical input to investors’ risk management processes.

Regulators globally are on a journey to increase the level of ESG disclosures, particularly for climate-related risks. We have responded to consultations from regulators focusing on the importance of:

  • Consistency between regulators
  • Sequencing and Implementation of Rules
  • Proportionality of requirements


UK Financial Conduct Authority (FCA) FCA publishes a Discussion Paper on Diversity and Inclusion in the Financial Sector – Working Together to Drive Change

As part of our mission to increase collaboration between asset managers and institutional investors to improve industry outcomes, at the SBAI we have a dedicated Culture and Diversity Working Group. We are supportive of the FCA’s intentions in this discussion paper and through the work and discussions within our working group make the following observations:

  • Quantitative vs Qualitative Data: On the theme of our next focus area in the C&D initiative we observe that disclosure solely based on metrics may not be appropriate as it can be difficult for smaller firms amongst other reasons. We recommend the use of qualitative questions also.
  • Regional differences: We note that global firms based in the UK may not be able to provide data for non-UK based employees
  • Proportionality: We recommend that should detailed metrics based reporting be decided on that a concept of standard and enhanced reporting should be introduced with thresholds based on number of employees and other similar measures.
  • Standardisation: We recommend that the FCA consider reporting requirements and allocator questionnaires that are currently in circulation to avoid introducing additional frameworks and reduce some of the resource requirements on firms.


FCA publishes a consultation paper on Enhancing Climate-Related Disclosures by Asset Managers, Life Insurers, and FCA-Regulated Pension Providers

Whilst we are generally supportive of enhancements in disclosure and risk management process, in response to a consultation on asset manager disclosure, we raised the following points:

  • Climate Focus – As climate is a subsection of the environmental considerations in ESG risks, there are other facets of ESG that are material to the investment process. Climate will therefore have varied financial materiality depending on strategy, time horizon, and traded asset classes of the product, amongst other considerations.
  • Lack of reliable ESG Data – whilst this is improving, the availability of data and agreed methodologies for the calculation of carbon-based metrics will be a substantial obstacle for the next few years. This will increase the risk of information-based gaps and potentially reduce accuracy.
  • Consideration of Asset Classes beyond Equities – the data challenges detailed above are more acute for non-equity asset classes and in some cases for equity assets outside of developed markets.
  • Lack of Differentiated Standard and Enhanced Reporting – all asset managers above the specified assets under management threshold are in scope for product level metrics-based reporting. This is inconsistent with other enacted and proposed regulations which typically have a concept of enhanced reporting for “ESG” labelled funds.
  • Level of Transparency Required in Reporting – product level reporting is mandatory for all in scope asset managers and full details of underlying holdings are required to be provided to a client on request. This level of transparency is inconsistent with similar proposed and enacted regulation and is likely to be inappropriate for commingled funds.
  • Inconsistency between Issuer and Asset Manager Regulations – issuers can report on a comply-or-explain basis, but full reporting will be mandatory for all in scope asset managers. Asset managers are subject to the same initial reporting deadlines as issuers. These points may present challenges for asset managers in collecting data and meeting the reporting deadlines.
 U.S. Securities and Exchange Commission (SEC) SEC requests for public input on Climate Change Disclosures:

Whilst this consultation related to disclosure by issuers, we responded with several key points that should govern any regulatory approach to ESG disclosures:

  • Making use of existing ESG disclosure frameworks
  • Ensuring global consistency of disclosure requirements
  • Considering other ESG risks in addition to climate
  • Proportionality of requirements
  • Sequencing and Implementation – disclosure should be mandated at the issuer level before the asset manager level


 Securities and Futures Commission of Hong Kong (SFC HK)  SFC publishes a consultation paper on the Management and Disclosure
of Climate-related Risks by Fund Managers

In response to a consultation on asset manager disclosure we raised the following points:

  • Disclosure should be mandated at the issuer level before the fund manager level.
  • Climate risk is being elevated as a risk factor and treated differently from the typically principles based approach to risk management regulation.
  • Any risk management regulations should retain flexibility given the diverse nature of the alternative investment industry.
  • Enhanced standards should apply to fund managers running dedicated ESG products rather than managers over a certain AUM threshold.