The Principles for Responsible Investment (PRI) has released a report that raises over whether ESG regulation is driving real change.

The Global Guide to Responsible Investment Regulation looks at almost 300 pieces of regulation covering pension fund rules, stewardship codes and corporate disclosure rules. It also includes interviews with policymakers, investors and stock exchanges in Europe, Asia, Africa and the Americas to find out if these initiatives change the way investors think about ESG, and ultimately the signals they send to their investee companies.

Analysis of the results suggests that while regulation is having an impact, regulatory frameworks aren’t fully aligned with sustainable development. Underpinning this is a belief that governments are failing to clearly signal the importance of ESG issues, and causing investors to be sceptical about the effectiveness of current measures.

Another problem the report highlights is that policymakers haven’t made the link between their ESG goals – such as the COP21 agenda or the UN Sustainable Development Goals (SDGs) – and the financial system. While policymakers in China, the EU and France have started to discuss these issues, no government has yet articulated the role they expect institutional investors to play in achieving those goals.

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