By Elise Attal, Head of EU and UK Policy, Margarita Pirovska, Head of Asia Policy and Multilaterals Policy and Heather Slavkin Corzo, Head of US Policy 

2020 has been a harrowing year for public health, economic growth and inequality. The pandemic wiped more than 5% of annual economic growth in G20 countries and deleted the equivalent of 140 million jobs worldwide, according to ILO and OECD projections. The recovery will be slow and take years. But there is a silver lining: despite this crisis, the importance of sustainability has not waivered. The big economic reset provides policy makers with opportunities to build back better, and to reform policy frameworks ensuring that the recovery is green and inclusive.

In 2019, the PRI assessed that sustainable finance policy was growing at an unprecedented rate, with over 500 regulations and policy instruments that support or require responsible investment across the 50 largest economies. In 2020 this trend continued, with over 130 new policies and revisions recorded in our regulation database. The next regulation database will be published in January 2021. 

Here we wrap up the key policy developments of 2020.

European Union

The EU maintained its ambition and leadership on sustainable finance. 2020 has been an intense year of policy reforms, with key regulations such as the EU Taxonomy on mitigation and adaptation and the Sustainable Finance Disclosure Regulation (SFDR) moving forward with limited delays, despite the COVID-19 crisis slowing down regulatory activities.

The PRI contributed extensively to the EU Taxonomy development as a member of the Taxonomy Expert Group (TEG) and in October, Nathan Fabian, Chief Responsible Investment Officer at the PRI, was appointed Chair of the European Platform on Sustainable Finance. The PRI also released a report alongside 37 case studies from investment managers and asset owners already testing the EU Taxonomy, providing insightful recommendations for its practical implementation.

Climate action

EU political ambition on climate change ramped up following Ursula von de Leyen’s election as President of the EU Commission in December 2019. In 2020, the European Commission put forward a climate law committing member states to net zero GHG emissions by 2050 and a 2030 target for GHG reductions of at least 55%. This aims to put climate action at the heart of the EU Green Deal package and to lay the path towards a greener recovery by embedding emission reductions targets into the EU Multiannual Financial Framework (MFF) and Next Generation recovery package.

The PRI monitored these developments closely, releasing recommendations to ensure that investors can scale up their contribution to the EU Green Deal and an EU climate roadmap setting priorities for policy action to achieve the net zero emission target by 2050.

United Kingdom

The UK has also been active on the sustainable finance front. Chancellor Rishi Sunak recently set out plans to require pension schemes, investors and issuers to report against the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), by 2025 at the latest (though many will be required to report sooner).

The simultaneous announcements of the UK’s first sovereign green bond and a plan to develop a green taxonomy show that green finance is an important plank of the government’s strategy in advance of hosting COP26 next year. This has been paired with real economy policy changes, such as a 2030 sales ban for petrol and diesel vehicles and a “10-point plan for a green industrial revolution” as the UK seeks to make good on its net zero by 2050 commitment made last year. The PRI has been analysing further how government and investors can deliver net zero targets in the UK.

United States

The US, under the leadership of President Trump, has moved in the opposite direction of other advanced economies when it comes to sustainable finance. We have seen multiple regulations issued by the Securities and Exchange Commission (SEC) and the Department of Labor (DoL) that undermine investors’ progress on ESG integration and active ownership. The SEC’s Rule 14a-8 (Shareholder Proposal Rule) made it more difficult for shareholders to engage with management on ESG topics through the proxy process, increasing costs and limiting who can submit proxy proposals.

The SEC’s Proxy Voting Advice Rule further hindered the proxy voting process by limiting investors’ ability to access independent outside advice while engaging in the proxy proposal process.

Department of Labor rules

The DOL similarly issued two new rules that work to stymie ESG integration, with one rule only finalised earlier this month. The DOL’s rule aimed at clarifying fiduciaries’ duty around consideration of ESG factors only added confusion and threatens the ability of savers to set ESG-themed funds as their default investment choice. The DOL’s most recent rulemaking erects near insurmountable barriers for ERISA fiduciaries to engage in proxy voting and shareholder engagement, requiring fiduciaries to prioritise financial returns over all other factors and examine and maintain meticulous records of all material data relevant to the decision. As this final rule was just issued, the PRI continues to examine its full impacts and differences from the original proposal.

As each of these changes would hinder progress towards the PRI’s Principles 1 and 2, the PRI policy team, along with numerous signatories, weighed in to oppose each proposal and worked to lessen their harm to ESG integration and sustainable investment.

Ultimately, we believe these four rules will harm US retirement savers and investors, making issuers less responsive to investors’ concerns about material ESG matters. As we look to 2021 and an incoming Biden administration, each of these rules could be reviewed through the regulatory process, and, as always, Congress has the ultimate ability to decide these questions via statute.


In Asia, progress on financial policy reforms and net zero goals has built on the existing dialogue on green finance. China announced a climate neutrality goal for 2060 and Japan aims for net zero by 2050. China proposed an update of the country’s Green Bonds catalogue, excluding the notions of “clean” fossil fuels; and “clean coal” as part of what would be considered as green activities. Earlier in 2020, China consulted on its new energy law, which will have an increased focus on climate change and renewable energies. The focus on climate in the region has increased, with Singapore preparing guidelines on environmental risk management, and the Hong Kong’s SFC consulting on new regulation for the management and disclosure of climate-related risks by fund managers.


Stewardship is also gaining momentum in the region, with India’s first stewardship code entering in force in July, and applicable on a mandatory basis to all investment managers in the Indian market. Japan updated its stewardship code in January, adding sustainability into the stewardship responsibilities of the code’s signatories.

One expected financial policy reform in China for 2020 has not yet been revealed: a mandatory disclosure framework requiring all listed companies to disclose environment-related issues. Our team has promoted mandatory ESG disclosure through numerous reports, including an investor survey, showing why investors need standardised, comparable ESG information to make informed investment decisions. Other regional markets made progress on ESG disclosure, including mandatory climate disclosures by the Hong Kong Stock Exchange, and a planned upgrade of India’s SEBI ESG disclosure framework that will apply to the top 1000 listed Indian companies.

Looking ahead to 2021

As we look towards the new year, we will continue to promote policy reforms that drive responsible investment, by continuing to work on three main goals.

Aligning financial policy with sustainability

Financial policies embedding sustainability goals will be needed to underpin real economy transformation. As long as sustainable finance and investment and ESG incorporation strategies are considered as optional and separate from mainstream finance and investment, real economies will perpetuate outcomes which are not in the best interest of people and the environment.

To align finance and investment policies and regulations with sustainability goals, policy makers need to implement fundamental policy reforms in terms of disclosure, stewardship, investor duties and sustainable taxonomies. These policy reforms are outlined in our policy toolkit, published with the World Bank, and summarising the key features and policy design considerations to put such regulations in place.

Delivering net zero

Our second goal is to support real economies aligned with the Paris Agreement, including by setting out industrial strategies for key sectors to transform business models and processes, aiming for net zero emissions in the long term. To support this, the PRI will publish climate policy briefings with concrete recommendations to implement such reforms in Japan and China, in addition to the EU, US and UK briefings.

Investing for impact 

Beyond aligning policies and processes, it is crucial that assessing and accounting for sustainability impact becomes a core part of investment activity. This is our third major policy goal for the year ahead. The Legal Framework for Impact project will focus on this topic in 2021, with the launch of the flagship report outlining recommendations for policy change where legal analysis determines that legal impediments are restrictive for investors seeking to incorporating sustainability impact in their investment decision making.

Investors need to support policy makers in aligning capital markets with sustainability goals and outcomes. They need to call for sustainable recovery that is both effective and fair, and aligned with climate goals. Our policy engagement report presents strategies investors should consider in their dialogue with policy makers.

United Kingdom and European Union

2021 should be an intense policy year for the UK and EU, with hoped-for crucial breakthroughs in the run up to COP26 and the G7/G20 summits in the UK and Italy. Both the UK and the EU have to submit their new Nationally Determined Contributions (NDC) under the Paris Agreement to the UNFCCC, incorporating net zero targets. Through various initiatives, such as Climate100+ and the UN-convened Net Zero Asset Owner Alliance, investors are intensifying the pressure to take concrete actions for scaling up private sustainable investments and transitioning the economy towards a low-carbon pathway.

All eyes will also be set on the European Commission, expected to release its renewed sustainable finance strategy in the first quarter of the year, to finalise its Taxonomy to cover four remaining environmental objectives and to revise its non-financial reporting directive. The UK is also expected to set out its vision for a green taxonomy and publish the first list of signatories to its new and improved Stewardship Code.

US policy

In the US, as President-elect Biden prepares to take office, the PRI has been advocating for a major shift in US policy related to sustainable finance. We believe that the barriers erected by the Trump administration must be removed and that ESG disclosure and modernising fiduciary duties to clarify the need for ESG integration should be top priorities in the new administration. We are looking forward to the opportunity to work for proactive reforms to advance sustainable finance and move the US towards net-zero carbon emissions.

Japan and China

In Japan and in China, we will continue promoting responsible investment guidance and regulations for asset owners who have the ability to lead the market by example. In China, we expect the development of a mandatory ESG disclosure framework. We will also promote stewardship guidelines for institutional investors, to provide an enabling environment for effectively orienting the economy on a path towards carbon neutrality. In both markets, we will also promote our policy recommendations for real economy reforms aligned with the Paris Agreement.



This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories. Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Nor do the views and opinions expressed on this blog constitute financial or other professional advice. If you have any questions, please contact us at [email protected].