EFAMA Regulatory Recap Week 9/2025: New ESG Rating Regulations and Fund Consolidation in Focus

The European Fund and Asset Management Association (EFAMA) has announced significant regulatory developments this week, with far-reaching implications for the European asset management industry. Two key topics were at the forefront:

1. New ESG Rating Regulations – Enhanced Transparency and Oversight
The European Parliament has passed new ESG rating regulations, introducing stricter oversight of ESG rating providers. These measures aim to enhance transparency in sustainability assessments and combat greenwashing. EFAMA welcomes this move but advocates for even broader regulation of all ESG data products.

➡ Key Takeaways:

ESG rating providers will now need authorisation from ESMA (European Securities and Markets Authority).
The new regulations strengthen trust in ESG investments and improve the comparability of sustainability assessments.
EFAMA calls for further regulation to ensure the long-term integrity of the ESG sector.

2. Fund Consolidation Alone Is Not Enough – EFAMA Proposes Alternative Strategy
In its latest Market Insights publication, EFAMA questions whether mere fund consolidation in Europe effectively reduces costs. Instead, the association suggests that asset managers should focus on larger fund volumes to better leverage economies of scale.

➡ Key Findings:

A comparison with the US reveals that larger fund volumes, rather than consolidation, achieve more effective cost reductions.
Economies of scale could help European asset managers remain competitive and alleviate margin pressures.
The debate over more efficient fund structuring is likely to gain further traction in the coming months.


LPA Insight: Navigating Regulatory Challenges with the Right Technologies

These latest developments highlight the increasing importance of RegTech solutions and innovative digital compliance tools for asset managers. As a leading provider of technology solutions for asset and wealth management, LPA Lucht Probst Associates supports financial institutions in efficiently meeting regulatory requirements:

🔹 Automated ESG Reporting Solutions – Seamless integration into existing processes to comply with new ESG regulations.
🔹 Digital Fund Structure Analysis – Optimisation of fund strategies through data-driven models.
🔹 Regulatory Compliance Platforms – Efficient management of policies to ensure adherence to European regulations.

➡ Want to learn more? Contact us for bespoke solutions in RegTech & Asset Management.


These developments underscore the increasing regulatory challenges facing asset managers in Europe. Companies that proactively adopt digital solutions can not only minimise compliance risks but also significantly enhance their operational efficiency and competitiveness.

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