Speaker: Professor Dirk Andreas Zetzsche (Professor of Financial Law, University of Luxembourg)

Abstract: Sustainability-oriented investors want to pay for impact, not compliance. We analyse the regulatory challenges and opportunities of impact investing. We find that advancing impact investing requires a departure from the EU Sustainable Finance Framework's (EUSFF) prevailing input-orientation and an adjustment of EU asset-management law towards an EU Impact Finance Framework.

In its current form, the EUSFF over-emphasises exclusion, using rule-based ex ante definitions of sustainable business (herein termed input). If a large share of global capital follows these rules, unsustainable firms’ capital costs will increase, furthering innovation of sustainable alternatives. However, the EUSFF alone cannot prevent global capital flows into unsustainable investments, and non-EU countries follow different approaches. Although the EUSFF encourages, in effect, the sale of unsustainable EU businesses to non-EU firms, its input orientation has not helped the planet: the same activities continue elsewhere, often under weaker environmental and social standards, leaving the planet worse off. Further, the EUSFF’s disregard for proven ex post impacts risks large-scale capital misallocation and “impact washing”. Worse, the input focus comes at the cost of investments paired with audited evidence of positive ESG impacts ex post.

We argue for shifting EU financial regulation from input to (proven) impact. Yet, rather than adding a new product category, we propose recognising positive impacts through five fine-tuned steps that simplify EU financial regulation, taking into account regulatory developments in the United Kingdom and Switzerland. These include abolishing the link between “do no significant harm” under the Taxonomy Regulation and the Sustainable Finance Disclosure Regulation, simplified reporting aligned with product materials and the emerging IFRS Disclosure Standards, introducing a new proportionality threshold for mid-sized AIFMs, and revising ESMA’s rules on fund names.

Professor Zetzsche is Professor of Financial Law at the University of Luxembourg where he has held the ADA Chair in Financial Law (inclusive finance) since March 2016 and functions as the Head of the Department of Law since 2024. He is also coordinator of the Faculty of Law, Economics and Finance's House of Sustainable Governance & Markets and Co-PI of the Future FinTech National Centre of Excellence in Research and Innovation.

Professor Zetzsche has published more than 400 publications on inclusive and sustainable finance, corporate governance, FinTech and RegTech, and collective investment schemes. He has spoken at most of the leading universities globally and has advised many of the major regulators, eg the FSB, the BIS, the Basel Committee, the European Commission, the European Parliament, ESMA, EBA, the ESRB and the US SEC. In February 2023, he made the case for financial inclusion at the United Nations Social Commission, and spoke on inclusive and sustainable finance at COP27, 28, 29 and 30.

Professor Zetzsche's paper Towards an EU Impact Investing Framework is available on SSRN.

3CL runs the 3CL Travers Smith Lunchtime Seminar Series, featuring leading academics from the Faculty, and high-profile practitioners.

For more information see the Centre for Corporate and Commercial Law website:

http://www.3cl.law.cam.ac.uk/

Speaker: Dr Clara Martins Pereira (Associate Professor of Financial Law, University of Durham)

Abstract: The increasing use of AI in finance is predicted to have mixed impact on financial stability: while AI can be used to help financial institutions and supervisors identify, manage, and monitor systemic risk, it can also increase the frequency and severity of crises by exacerbating existing vulnerability channels. Under the UK’s technology-agnostic approach to AI, algorithmic technologies are primarily governed through existing sectoral frameworks rather than bespoke regulation. I argue that this approach might be insufficient to mitigate their negative impact on financial stability. The features that separate AI from other technologies—opacity, autonomy, and adaptability—make existing regulatory frameworks and architectures a poor fit for tackling the financial systemic risk created by AI. Disclosure rules are undermined by ‘black box’ opacity and the unpredictability of autonomous algorithm-algorithm interactions, while ex-ante testing struggles to predict endogenous risks arising from those interactions and their systemic impact. Crucially, model risk management and operational resilience frameworks, often calibrated for acute disruptions and focused on individual firms, are ill-equipped to ensure systemic resilience when AI models drift in similar ways. The article concludes that mitigating the risks of AI for financial stability calls for a purposeful change towards specialised algorithmic governance rules, and a review of supervision and enforcement practices.

Dr Clara Martins Pereira is Associate Professor of Financial Law and Director for International Development at Durham Law School, Invited Professor at Católica Lisbon School of Law, and Global Associate Professor of Law at the University of Notre Dame. Her research focuses on financial law and regulation, technological innovation, and sustainable development. Clara holds a DPhil, MPhil, and Magister Juris from the University of Oxford, as well as an MSc in Law and Business and an LLB from Católica Lisbon. She has held academic roles at King’s College London, the University of Oxford, and the LSE, and served as a Visiting Scholar at Columbia Law School, Sapienza University of Rome, and the Max Planck Institute, among others. Formerly a capital markets lawyer at PLMJ, she has also acted as a consultant for organisations such as the World Bank and ICF.

3CL runs the 3CL Travers Smith Lunchtime Seminar Series, featuring leading academics from the Faculty, and high-profile practitioners.

For more information see the Centre for Corporate and Commercial Law website:

http://www.3cl.law.cam.ac.uk/

Convenors: Professor Louise Gullifer (University of Cambridge) and Associate Professor Dora Neo (National University of Singapore)

Speakers:

• Junayed Ahmed CHOWDHURY, Vertex Chambers, Bangladesh
• Megumi HARA, Chuo University, Japan
• Parawee KASITINON, Thammasat University, Thailand
• Debanshu MUKHERJEE, Vidhi Centre for Legal Policy, India
• Huyen PHAM, International Finance Corporation, Vietnam
• Griselda (Gay) G. SANTOS, Financial Inclusion Advocate, Philippines
• Aria SUYUDI, Indonesia Jentera School of Law, Indonesia
• Lebing WANG, Law School of University of International Business and Economics, China

The edited volume of essays Secured Transactions Law in Asia: Principles, Perspectives and Reform (Hart Publishing, 2021) provided an in-depth exploration of secured transactions law in thirteen civil law and common law jurisdictions in Asia. A varied picture emerged. While the law in some jurisdictions had already been reformed to conform largely with the principles reflected in modern personal property security statutes and international codifications such as the UNCITRAL Model Law on Secured Transactions, there were jurisdictions that were in the process of undergoing secured transactions law reform, as well as those in which no particular attention was being paid to reforming the law.

In this webinar, the editors of the volume, Professor Louise Gullifer and Associate Professor Dora Neo, bring together some of its contributors for an update of significant developments in secured transactions law that have taken place since its publication. Jurisdictions that are discussed include China, Indonesia, Japan, the Philippines, Thailand, Vietnam, Bangladesh and India.

3CL runs the 3CL Travers Smith Lunchtime Seminar Series, featuring leading academics from the Faculty, and high-profile practitioners.

For more information see the Centre for Corporate and Commercial Law website:

http://www.3cl.law.cam.ac.uk/