How Risk and Compliance functions can support the net zero transition

To mitigate the worst effects of climate change, action is needed now. Regulators, supervisors and wider stakeholders increasingly expect investment managers to develop, disclose and execute credible transition plans, as investment managers are in a unique position to help channel investments to sustainable activities.

In order to transition, investment managers will need to transform their entire organisation across their business strategy, products and services, investment decision-making, risk management and operations. Our joint report explores how Risk and Compliance functions can help facilitate this transition.

Our report includes our regulatory insight, as well as expert input from Investment Association members. The actions for Risk and Compliance functions as set out in this report will assist investment managers with mitigating the reputational, conduct, regulatory, and liability risks associated with the transition process.

The report provides a regulatory overview in relation to transition plans and explores the following key areas:

• Credible net zero plans
• Governance, culture, and incentives
• Climate risk management
• Greenwashing
• Treatment of customers
• Thinking about ESG holistically