In a commendable effort to help rid the investment world of substandard ethical, ESG, sustainable, green and impact funds, the industry’s UK governing body, the FCA (Financial Conduct Authority), is set to introduce a detailed set of rules and guidelines culminating in specific labels that will be attached to qualifying funds if they reach the necessary standard.
This will help introduce consistency and, ideally, remove much of the ‘greenwashing’, be it intentional or accidental, that sadly taints a modest proportion of this vital sector of the investing world.
Once in place it should help a) give relevant fund providers a solid framework within which they can be confident that the funds they provide are of a good standard, b) ethical investment financial advice firms such as Good Green Money to separate the good funds from the bad when choosing which ones to recommend to clients, and b) consumers interested in investing this way feel confident that they are being offered meaningful, effective investments.
The FCA have outlined their proposals via a 125 page consultation paper called ‘CP22/20: Sustainability Disclosure Requirements (SDR) and investment labels’ and they have invited feedback before they issue the official set of guidelines in the coming months.
As you would imagine, this is a challenging task, not least because one person’s idea of an ethical investment could well be different from the next persons, and the need to create a set of rules whilst also allowing for some level of subjectivity is a difficult balancing act.
Recently, the team at financial adviser support specialists, Tenet, were kind enough to invite Haydon to join a panel debate to discuss the FCA’s proposals called ‘Will the FCA’s planned sustainability labels help wipe out greenwashing once and for all?’. Please do watch this vlog should you wish to discover our views.
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