Wind mills are seen at Mynydd Portref Wind Farm come Hendreforgan in South Wales, Britain, March 26, 2021. REUTERS/Matthew Childs
LONDON, July 19 (Reuters) – Many asset managers seeking authorisation for sustainable funds are failing to provide honest info to substantiate their green credentials, Britain’s financial watchdog mentioned on Monday.
Patrons are placing extra of their money into funds which have a mentioned technique of favouring environmental, social and governance (ESG) topics and contribute to tackling climate exchange and other sustainable targets.
The wall of cash into ESG funds has already raised considerations amongst regulators over “greenwashing” or overstated green credentials.
The Monetary Behavior Authority mentioned ESG and sustainable funds are truly the quickest-rising segment of the European funds market, main to a high volume of applications for authorisation.
“Quite loads of these have been poorly drafted and have fallen below our expectations. They usually private claims that beget no longer undergo scrutiny,” the FCA mentioned in a letter to fund managers, commencing guiding principles on what it expects in authorisation applications.
Questions raised by the regulator on the authorisation stage will deserve to have already been addressed earlier on.
“We quiz to pass looking out out subject cloth improvements in future applications,” the FCA mentioned.
“We moreover quiz sure and honest ongoing disclosures to customers where funds establish ESG-connected claims, and we’re looking out out for to pass looking out out funds bring on their mentioned targets and/or strategy.”
The European Union has already home out principles for ESG investing, identified because the sustainable finance disclosure law or SFDR, but Britain is now no longer in the bloc.
Given many asset management companies are tainted-border, the FCA mentioned its guiding principles are intended to be complementary SFDR until Britain fleshes out its hang guidelines in this apartment.
Reporting by Huw Jones
Editing by David Goodman and Susan Fenton
Our Standards: The Thomson Reuters Belief Tips.