Connect with us

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website. .


What’s in a name? EU watchdog cracks down on ESG investment funds

2022 11 18T113521Z 1 LYNXMPEIAH0FU RTROPTP 4 EU FINANCE - Global Banking | Finance

By Huw Jones

LONDON (Reuters) – The European Union’s securities watchdog on Friday proposed strict curbs on how investment funds are sold in the bloc if they tout environmental, social and governance (ESG) credentials to attract cash.

ESG funds have grown in popularity in recent years and in the second quarter of this year accounted for 27% of share assets under management in funds across the EU, according to figures from the European Securities and Markets Authority (ESMA).

This has raised concerns among regulators over so-called ‘greenwashing’, whereby funds make sustainability claims which are exaggerated or unverified.

ESMA on Friday published a consultation paper which proposes two criteria for using ‘ESG’ and ‘sustainability’ in a fund’s title.

“Funds’ names are a powerful marketing tool,” ESMA said in a statement.

“Competitive market pressures create incentives for asset managers to include terminology in their funds’ names designed to attract investor assets, leading in certain instances to greenwashing, for example by making false claims about sustainability practices.”

If a fund has any ESG-related words in its name, at least 80% of its investments should meet environmental or social objectives as set out in the EU’s rules on sustainability related disclosures in the financial sector, ESMA said.

“ESMA believes that the proposed threshold of 80% is high enough to meet investors’ expectations that a large majority of the fund’s actual or intended investments is made in assets consistent with its name thus avoiding fund names to be deceptive or misleading,” the watchdog said.

There is an additional threshold if the fund is using ‘sustainability’ in its title, so that at least half of initial 80% threshold for investments should be in sustainable assets.

There may also be a need for “safeguards” on remaining investments in a fund so that investors are not misled, ESMA said.

The public consultation closes mid-February and ESMA will then publish final guidelines in the second or third quarter of 2023, followed by a six-month phase in.

(Reporting by Huw Jones; Editing by Mark Potter and Louise Heavens)

Global Banking & Finance Review


Why waste money on news and opinions when you can access them for free?

Take advantage of our newsletter subscription and stay informed on the go!

By submitting this form, you are consenting to receive marketing emails from: Global Banking & Finance Review │ Banking │ Finance │ Technology. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Post