Sustainable Finance Lobbying Overview: Franklin Templeton appears to have had generally positive engagement on sustainable finance policies, supporting regulated corporate ESG disclosure and measures to incorporate ESG into investor duties.

Top-Line Messaging on Sustainable Finance Policy: Franklin Templeton has stated support for tackling climate change, advocating for action to achieve net zero emissions by 2050. In 2021, Franklin Templeton (along with investment management subsidiaries Martin Currie, Brandywine, and ClearBridge) joined the Net Zero Asset Managers Initiative, supporting the goal of emissions reductions in order to limit warming to 1.5C. Franklin Templeton has called the EU Sustainable Action plan a “pivotal development” and mentioned engaging with regulators on sustainable finance, appearing supportive of regulations around the world. Martin Currie appeared to support regulatory action on sustainable finance in the EU and UK in its 2022 Stewardship Report, but emphasized that regulation is only one part of driving change to a more sustainable system.

Position on Regulated Corporate ESG Disclosure: Franklin Templeton appears supportive of regulated corporate ESG disclosure. In a March 2022 article, Franklin Templeton stated support for the Securities and Exchange Commission’s (SEC) proposed climate disclosure rule, calling it a “welcome blast of fresh air that can revitalise capital allocation for the benefit of all.” In an April 2022 article, Franklin Templeton called the efforts by the SEC and the International Financial Reporting Standards Board to mandate corporate climate disclosure a “necessary, but not sufficient” step to properly understand climate risk. In its June 2022 comments on the SEC’s rule, Franklin Templeton expressed strong support for the proposal. In its 2021 Stewardship Report, Franklin Templeton supported the International Sustainability Standards Board’s (ISSB) efforts to develop a global baseline for sustainability disclosures, but emphasized the importance of a “double materiality” approach to reporting, an increase in ambition from the proposed standards.

Position on Taxonomies and ESG Standards/Labels/Benchmarks: In a 2019 insights paper, Franklin Templeton supported expansion of a taxonomy to cover wider geographic areas, and advocated for the inclusion of transitional activities to provide a more flexible framework, which would have an unclear impact on the stringency of the policy. In a 2020 news article, Franklin Templeton’s global head of ESG expressed concerns about the implementation and efficacy of the taxonomy.

In comments to the Department of Labor in 2020, Franklin Templeton expressed concerns about a lack of uniform ESG definitions and standards, and called for “greater regulatory oversight and guidance” to prevent greenwashing. In August 2022, Franklin Templeton supported the SEC’s proposed categories for ESG funds, suggesting that funds that only consider governance factors be removed from the ESG ‘Integration Fund’ category.

Position on Incorporating ESG Factors Into Investor Duties: Franklin Templeton appears to be generally supportive of the incorporation of ESG factors into investor duties. Franklin Templeton opposed a 2020 Department of Labor rule that sought to limit ESG investing, writing that ESG considerations are “fundamentally pecuniary,” and in its December 2020 Stewardship Report, Franklin Templeton welcomed the Biden administration’s review of this rule. In 2021, Franklin Templeton and subsidiary ClearBridge Investments supported the Department of Labor’s proposal to reverse previous rules limiting ESG investing. In a 2021 press release and a 2021 ESG panel, Franklin Templeton stated support for the EU Sustainable Finance Disclosure Regulation (SFDR), explaining that the regulation will help foster transparency and prevent greenwashing. Martin Currie’s 2022 Stewardship Report describes engagement with ESG stewardship regulations including the UK Sustainability Disclosure Requirements (SDR) but details of this engagement are unclear. In August 2022 comments to the SEC, Franklin Templeton supported but suggested narrowing proposed disclosure requirements for investors about their ESG practices.

In September 2022, a ClearBridge representative spoke out against a Texas law that seeks to limit ESG investing. In March 2023, Franklin Templeton signed onto a Freedom to Invest joint letter, directly advocating for policymakers to support integrating ESG into investor duties. In February 2023, ClearBridge wrote that the “anti-ESG” movement had a “chilling effect” on retirement plans’ willingness to consider ESG factors, and asserted that, in contrast to the claims of anti-ESG proponents, “ESG issues are financially material.”

Industry Association Governance: Franklin Templeton has disclosed membership to industry associations but has not published a comprehensive disclosure of these groups’ sustainable finance policy positions or engagement activities.