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The rules were issued for consultation in January 2022, with the aim to enhance the transparency of disclosures on sustainability-related products, improve product comparability, and guard against greenwashing. . It must also appropriately reflect this focus in its investment objectives or strategy in its registration statement. .
The growing use of ESG-related language in fund names and documentation without transparency and underlying evidence increases greenwashing risk, ESMA warned.
A new report says that trend has reversed itself in the last two years, as the industry struggles to respond to allegations of greenwashing and a tougher regulatory environment. . Negativescreening (for instance, screening out weapons, tobacco or fossil fuels) is number two at 91%, and corporate engagement is third at 79%. .
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