The FCA, the UK’s financial regulator, recently stated it is pushing back against investment funds that are attempting to mislead investors by labelling their products as being environmental, social and governance (ESG) focused.
In other parts of the world, regulators are driving a tightening of the rules regarding “greenwashing,” where enterprises make over-inflated claims of being eco-friendly to entice investors. Many UK consumers can seek out the expert aid of an independent financial advisor in Chester, Sheffield, and other cities before making investments like this.
Unlike financial advisors who push specific investment vehicles, independent financial advisors (IFAs) like wealth managers can offer an informed and impartial service.
There are currently droves of applications from investment funds that seek to register as an ESG-focused fund, and others that wish to or rebrand themselves as being focused on sustainability. This is because ESG investment is viewed as a growing sector involving a considerable volume of money.
However, multiple passive funds are re-labelling their operation with names related to ESG, but are simply working with standard indexes and have no ESG focus. Additionally, other funds possess holdings that differ greatly from the ESG-related statements and objectives they have set out.
For instance, one investment fund claiming to have sustainable credentials was investing in companies with high levels of carbon emissions.
The FCA has recently consulted on a brand new set of requirements for sustainable disclosure by investment funds, and is assessing feedback prior to issuing its final ruling.
