(Reuters) – When environmental, social and governance funds raise trillions of dollars, global market watchdogs moved on Tuesday to flush out all asset managers that could deceive investors.
The ESG data for its products, with the value of such funds reaching the record $ 3.9 trillion by the end of the third quarter, shows Morningstar data.
The penalties for "greenwashing" have been few and far between.
IOSCO, which groups watchdogs from the United States, Europe, Asia and elsewhere, has published recommendations that its members are required to apply when examining how asset managers sell funds that promote good ESG practice.
"Establishing regulation expectations are therefore fundamental to addressing issues related to risk management and greenwashing, says Erik Thedeen, head of Sweden's financial market watchdog and chairman of IOSCO. should control the asset managers' internal policies and procedures for such investments, and how they market funds that claim to be sustainable.
The new rules coincide with a UN conference crucial to averting the most catastrophic effects of climate change initiated in Monday, where world leaders, environmental experts and activists appealed for decisive action to t stop global warming.
The baseline for global standards was established. by IOSCO strives to support investor protection and strengthen the credibility of green finance to help governments achieve net zero targets.
Regulators said the recommendations are part of a holistic approach that includes a new International Sustainability Standards Board to write "baseline" revelations from listed companies about how climate change affects their results.
In addition, IOSCO, whose members regulate 95% of the world sec . urities markets, will later this month present ways to make ESG ratings and data, often used by asset managers for marketing sustainable funds, more rigorous and transparent.
Reforms say reforms like Tuesday's ratings and joint venture disclosures will help punish greenwashing more easily and consistently in all jurisdictions.