ESG Regulation in Finance

This lecture covers ESG regulation in finance, focusing on the European Union and the United States. It explains the EU's taxonomy for sustainable activities, the SFDR for asset managers, and the CSRD for firms. It contrasts the laissez-faire approach in the US with the EU's systematic regulation. The lecture also delves into ESG engagement strategies, including activism, conservatism, constructivism, and opportunism, highlighting the tools and characteristics of each. It discusses the impact of large shareholders, the role of institutional asset managers, and the emergence of ESG activism funds. The lecture concludes with insights on the performance of ESG investing, including equilibrium models, empirical results, and the inflows into ESG funds.