A new set of European Union (EU) rules coming into force Tuesday will put fresh pressure on asset managers as they seek to steer everyday retail investors around the complexities of sustainable investing.

The changes are the result of an amendment to the revised Markets in Financial Instruments Directive, or MiFID. It requires investment managers and financial advisers to understand and act on the "sustainability preferences" of retail clients. These investors, in turn, can hold asset managers to account if their environmental, social, and corporate governance (ESG)–focused funds don't meet expectations—by not being as green as they might initially appear, for example.

In practice, many are still concerned about the lack of granular data on ESG issues; the challenge of defining what makes for a sustainable investment; and uncertainty about how the new rules will be enforced by individual countries. Europe's financial services industry, which lobbied for the amendment to be delayed, warned it will cause "huge confusion" and "great legal uncertainty."

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