Global Trustee and Fiduciary Services Bite-Sized Issue 5 2025

10 QUICK LINKS AIFMD (UK) CRYPTOASSETS DATA EMIR FINTECH FSB IOSCO MARKET ABUSE REGULATION MICA MIFID II/MIFIR SUSTAINABLE FINANCE/ ESG ASIA PACIFIC AUSTRALIA EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM Global Trustee and Fiduciary Services Bite-Sized | Issue 5 | 2025 IAIS Publishes Comprehensive Application Paper on the Supervision of Climate-related Risks in the Insurance Sector On 16 April 2025, the International Association of Insurance Supervisors (IAIS) published its Application Paper on the supervision of climate-related risks in the insurance sector, following four consultations and extensive member and stakeholder engagement. The paper aims to support supervisors in effectively integrating climate-related risks into their supervisory practices, thereby strengthening the resilience of the global insurance sector and builds on and replaces an earlier Application Paper published in 2021 on climate-related risks. This paper also relates to the IAIS’ support for multi-party efforts to build resilience, including work to address natural catastrophe protection gaps. The Application Paper outlines good practices and guidance for supervisors on several areas, including: • The role of supervisors in assessing climate-related risks; • Integration of climate-related risks into supervisory frameworks with respect to corporate governance, risk management and internal controls; • The impact of climate-related risks on valuation and investment practices; • Supervisory reporting, public disclosure andmacroprudential supervision of climate-related risks; • Group supervisory issues; and • The role of climate-related risk scenario analysis and important considerations for the impact of climate-related risks on market conduct. Link to the Application Paper here Fund Names – ESG-related Changes and their Impact on Investment Flows On 10April 2025, the European Securities andMarkets Authority (ESMA) published a TRVRisk Analysis (RA) on the evolution of social, governance or sustainability-related (ESG) names among EU-domiciled investment funds since 2009 and the impact of adding an ESGname on investor flows. ESMA states that fund names are most likely the first piece of information investors encounter about a fund and are thus a crucial signal of the fund’s strategy and aims. However, when fund names do not accurately reflect the underlying investments or actual investment strategy, they can undermine their signalling function and mislead investors. Building on a previous ESMA study on EU fund names, the RA explores whether the simple decision of fund managers incorporating ESG terms into their funds’ names leads to additional investor interest. If so, ESMA says, this may incentivise potential greenwashing behaviour, undermine investor trust and hinder efforts to promote sustainability within EU financial markets. In the first part of the RA, ESMA analyses the evolution of ESG names among EU-domiciled investment funds since 2009, including both UCITS and alternative investment funds (AIFs). The results show that the proportion of funds with ESG-related names increased significantly from less than 3% before 2015 to about 9% by mid-2024. ESMA says this was primarily driven by UCITS funds, for which the proportion of funds with ESG-related names accounted for 15% by mid-2024. The terminology also evolved from a wide range of unique terms to more standardised terms such as ‘ESG’, now representing over 40% of all ESG-related words added post-2021 by UCITS and AIFs. In the second part, ESMA examines the impact of adding an ESG name on investor flows. ESMA says the results indicate that adding an ESG term can significantly boost fund inflows, especially in the immediate quarter following the name change, with a sustained positive impact in subsequent quarters. However, the impact varies depending on the specific ESG terms used, with environmental-related terms showing the most substantial effect on inflows, highlighting the importance of ensuring that name changes are reflected in portfolio investments. Link to the Risk Analysis here