Signage is seen for the FCA (Financial Conduct Authority), the UK's financial regulatory body, at their head offices in London, Britain March 10, 2022. REUTERS/Toby Melville
LONDON: Britain’s financial watchdog is having to “push back” against some investment funds that misleadingly attempt to label themselves as being focused on environmental, social and governance (ESG) based performance.
Regulators across the world are seeking to crack down on “greenwashing”, or over-inflated climate friendly claims by companies and funds to attract investment.
There are huge numbers of applications from funds seeking to register as being ESG-focused funds or relabelling themselves as sustainability-focused as a large volume of money enters the fast growing investment sector, said Mhairi Jackson, policy lead in asset management at the Financial Conduct Authority (FCA).
“We have seen some passive funds with ESG related names that are actually just passive funds, they are just replicating normal indices that don’t have a ESG focus, which we deem to be completely misleading and something we have been pushing back on,” Jackson told a conference held by Luxembourg funds industry body Alfi.
“We’ve also seen some funds come through where the fund’s proposed holdings differ very much from the objectives and the statements that they are holding our to be true,” she said.
One fund that was calling itself sustainable was invested in a large number of high carbon emitting companies in its top 10 holdings, she added.
The FCA has been consulting on new sustainable disclosure requirements for investment funds, and is now considering the feedback before issuing final rules. — Reuters
