ESG Confusion Prompts Watchdog’s Demand for Rethink of Rules (1)

Europe’s markets watchdog is calling for a rethink of the region’s ESG investing rulebook after finding that the existing framework is being misinterpreted.

At issue is the tendency of fund managers and their clients to treat the EU’s disclosure regime as an ESG labeling system. As a result, investing clients are often left with the impression that funds within a given disclosure category will deliver positive environmental, social or governance results, which isn’t the case.

“The use of current sustainability disclosures under SFDR as a ‘label’ can be misleading,” Verena Ross, the chair of the European Securities and Markets ...