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Cayman Islands Monetary Authority Supervisory Information Notice on ESG and Sustainable Investing

28 April 2022

Cayman Islands Monetary Authority Supervisory Information Notice on ESG and Sustainable Investing.

In the update, CIMA stated they will continue to:

- undertake reviews

- assess the available information, such as best practices undertaken in other key financial jurisdictions, with the aim of developing a suitable regulatory and supervisory approach for climate related risks and other ESG-related risks - ‘equivalence emerging which may help align ESG standards’

Greater training and understanding in this segment are required, including robust investor education related to the evolving risks and issues associated with ESG-type investments, examining the collection and management of data required for risk modelling and establishing consistent transparency and disclosure requirements.

Sustainable investing is a complex and developing subject, and the expectations and practices around ESG-related risks are also quickly evolving. Regulated funds need to better understand the impact of ESG-related risks on their implementation of this investment strategy. For example, CIMA has indicated that ‘those charged with governance of regulated funds should have clear roles and responsibilities in managing and mitigating the risks from climate change and other ESG-related risks in line with the fund’s set investment objectives and should start establishing reliable approaches for identifying, measuring, monitoring, and managing material ESG-related risks’.

Additionally, funds are required to ensure clear and ongoing disclosures in the context of their reporting requirements.

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