The EU is considering its own version of France's ground-breaking energy transition law, it was claimed today.
The French law, which came into force in January, requires asset owners and asset managers to report on their portfolio's integration of environmental, social and governance (ESG) factors, climate risks, and contribution to the transition to a low-carbon economy, or explain why they have not done so.
The law, known as Article 173, is expected to have wide reaching implications for the financial sector in France and beyond because it will force mainstream players to look at ESG and climate considerations.
But the EU is now considering its own version of the law, according to Kevin Bourne, managing director of database services at FTSE Russell.
"The EU is looking at this and have been talking about it," he said. "We have got some views that they might look at doing something stronger than what the French have done."
"It appears that Brussels might be looking to introduce its own regulatory regime echoing what's going on in France, using the French experience as a learning bench," added Gordon Morrison, managing director of ESG services at FTSE Russell.
He added that, unlike the French law, the European version might make reporting mandatory and stipulate the metrics to be reported.
Bourne said the French law does not just affect France, but has "far-reaching ramifications for the industry globally". For example, asset managers in Boston are being asked by French pension funds how they will comply with the regulations.
A spokesperson for the European Commission declined to comment.