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UK watchdog says some funds attempting to mislead with ESG label

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Reuters or enjoy below

🗞️ Driving the news: Britain's Financial Conduct Authority (FCA) has observed and is attempting to counter attempts by some investment funds to misleadingly portray themselves as environmentally, socially, and governance (ESG) centric

🔭 The context: There's been a significant rise in funds applying to register as ESG-focused or rebranding to appeal to the surge in eco-conscious investments
• At the same time, the global pushback against "greenwashing" has intensified, with regulators keen on ensuring genuine sustainability claims

🌍 Why it matters for the planet: Authentic ESG investment is crucial for channeling funds into sustainable ventures
• False claims not only mislead investors but also undermine genuine efforts to address global environmental and social challenges

⏭️ What's next: The FCA is currently reviewing feedback on its sustainable disclosure requirements for investment funds
• The watchdog aims to fine-tune its original proposals, especially concerning marketing restrictions and the criteria to qualify for an ESG label

💬 One quote: "We've seen some passive funds with ESG related names that are actually just passive funds, they are just replicating normal indexes that don't have an ESG focus, which we deem to be completely misleading." (Mhairi Jackson, Financial Conduct Authority)

📈 One stat: A noteworthy observation from the FCA was a so-called "sustainable" fund having several high carbon-emitting companies among its top 10 holdings, highlighting the extent of greenwashing in the sector

Click for more news covering the latest on sustainable finance

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