McDermott Comment | Even Asset Managers Worry About ‘Greenwashing’ As ESG Rules Kick In

Overview


Ranajoy Basu, partner at law firm McDermott Will & Emery, said:

“Greenwashing is coming under significant scrutiny both, by regulators and the investor community. There has been a lot of activity recently by regulators, including the FCA, who is consulting on a set of anti-greenwashing principles to clarify a consistent standard or expectations when considering applications to authorize sustainable investment structures. It is extremely important that structured products being labeled as ‘green’ is not misleading from a disclosure standpoint so that investors can make an informed decision when considering their investments. This is the key driving factor behind FS19/6 on climate change and green finance.

The lack of regulation and current supervision of ESG assessment, including ratings, gives potential rise of “greenwashing” and mis-selling. We understand that several regulators, including the European Commission are expected to address this in the Renewable Sustainable Strategy, expected to be published this month. In the meantime, there are significant pressures on Issuers to include detailed disclosure in the documents to ensure that there is no ‘greenwashing’ and that disclosure is transparent and fair allowing investors to make an informed decision when financially backing sustainable finance products.”