UK Asset Managers Face Crackdown on Use of ‘ESG’ Labels on Funds

The UK’s financial watchdog has unveiled a new framework designed to protect retail investors from misleading ESG claims.

The measures include an explicit anti-greenwashing rule, product labels to help investors understand a fund’s specific goals, and marketing requirements aimed at ensuring that products don’t promote a sustainability objective that doesn’t exist.

“We have been concerned that some firms may be making misleading or exaggerated sustainability-related claims about their investment products,” said Sacha Sadan, director of the Financial Conduct Authority’s environmental, social and governance unit.

Britain’s framework targeting ESG funds comes as the European Union faces a wall of criticism ...