What difference does regulation make to ESG?

The short answer is $2trillion ...

You hear a lot about the impacts of regulation but this one should probably be at the top of anyone's list.  

According to a recent report from Global Sustainable Investment Alliance, sustainable investment assets fell by 15% between 2018 and 2020 (from $14 trillion to $12trillion) as a result of the introduction of rules about funds greenwashing.  The Sustainable Finance Disclosure Regulation (or SFDR) requires funds managers to consider and disclose the ESG credentials of their funds.   

https://www.bloomberg.com/news/articles/2021-07-18/european-esg-assets-shrank-by-2-trillion-after-greenwash-rules?cmpid=BBD071921_GREENDAILY&utm_medium=email&utm_source=newsletter&utm_term=210719&utm_campaign=greendaily