The UK’s Financial Conduct Authority (FCA) has set out a series of principles for ESG labelled funds, prompted in part by the number of poor-quality fund applications seen by the regulator.
With increasing numbers of applications for new and refocused sustainability-labelled funds, the FCA said it was essential that assertions made about fund goals were reasonable and substantiated, and that the inability of consumers to judge whether funds met their needs and preferences could undermine trust in the ESG market.
RI reported earlier this month that the regulator was preparing to issue guiding ESG principles for investment funds.
The three principles, published today, relate to fund design and disclosure, delivery and ongoing monitoring of holdings, and the accessibility of disclosures for consumers:
- References to ESG (or related terms) in a fund’s name, financial promotions or fund documentation should fairly reflect the materiality o…