The Inside Information Regime of the MAR and the Rise of the ESG Era

European Company and Financial Law Review, 2021 (Forthcoming)

European Corporate Governance Institute - Law Working Paper No. 548/2020

35 Pages Posted: 28 Oct 2020

See all articles by Peter O. Mülbert

Peter O. Mülbert

University of Mainz - Center for German and International Law of Financial Services and Faculty; European Corporate Governance Institute (ECGI)

Alexander Sajnovits

Johannes Gutenberg University Mainz

Date Written: October 27, 2020

Abstract

The rise in ESG investing has been characterized as an “investor revolution” and a manifestation of “social change”. The current coronavirus pandemic will arguably intensify the impact of such social change, with the “S” and “G” components of ESG, in particular, having been brought into sharper focus during the crisis. The issue of the extent to which ESG factors are (currently) of considerable importance – and, in particular, are likely to become even more so in the future – for the performance of share prices remains a highly controversial one in financial economics. However, where an empirically substantiated effect of ESG-related information on the prices of financial instruments can be shown, the question of whether such information is also of relevance to the inside information regime of the Market Abuse Regulation (“MAR”) arises and must be answered. This article explores the potential effect of ESG-related information and an increase in ESG-compliant investments on the prohibition on insider dealing and the obligation to publicly disclose inside information. We believe that the ESG preferences of a critical mass of real-life investors and, as a corollary, ESG-related information, are and will continue to be of great importance to the inside information regime. However, the intense debate regarding the precise depiction of the ‘reasonable investor’ within the meaning of Art. 7 MAR indicates that the relevance of ESG-related information to the inside information regime of the MAR is by no means clear. In light of these uncertainties, and given its efforts to promote sustainable finance, the EU legislature would be well advised to further specify the concept of inside information with a particular focus on ESG-related information.

Keywords: ESG, sustainable finance, investor preferences, market abuse regulation, insider dealing, inside information, reasonable investor, materiality

JEL Classification: G30, G32, G41, K22, Q51.

Suggested Citation

Mülbert, Peter O. and Sajnovits, Alexander, The Inside Information Regime of the MAR and the Rise of the ESG Era (October 27, 2020). European Company and Financial Law Review, 2021 (Forthcoming), European Corporate Governance Institute - Law Working Paper No. 548/2020, Available at SSRN: https://ssrn.com/abstract=3719944 or http://dx.doi.org/10.2139/ssrn.3719944

Peter O. Mülbert (Contact Author)

University of Mainz - Center for German and International Law of Financial Services and Faculty ( email )

Chair of Corporate Finance
D-55099 Mainz, 55128
Germany
+49 6131 392 30 40 (Phone)
+49 6131 392 61 64 (Fax)

HOME PAGE: http://www.jura.uni-mainz.de/muelbert/

European Corporate Governance Institute (ECGI)

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Alexander Sajnovits

Johannes Gutenberg University Mainz ( email )

Saarstr. 21
Jakob Welder-Weg 4
Mainz, 55122
Germany

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