SEC prepares rules to combat “greenwashing” in the financial market
Being ESG has become a matter of order for companies and investors in recent years. In the midst of society’s growing demand for environmental, social and governance issues to be included in investment decisions, many companies and managers have begun to announce products and initiatives that, according to them, comply with these three precepts.
While some financial services and products actually comply with the items that make up the acronym, others just adopt the speech, but, in practice, do nothing. It is what is conventionally called greenwashinga concept that can be summarized as painting ESG products and services that actually do not meet these requirements.
Identifying who actually complies with ESG precepts and those who are deceiving investors and consumers has become a problem and the Securities and Exchange Commission (SEC) wants to address this in the capital market.
Sheriff of the American market, the SEC is preparing a series of rules to structure and standardize how investment funds that have terms such as ESG, sustainable and low carbon in their names carry out and publicize their initiatives. The information is from the British newspaper Financial Timeswho heard from people familiar with the initiative.
The autarchy’s idea is to require managers to inform how the ESG is incorporated into investment decisions and how the funds vote at the ordinary meetings of the companies in which they hold a stake.
Demand for funds that comply with ESG precepts has grown strongly in recent years. The global market for funds linked to sustainability issues totaled US$ 2.8 trillion in the first quarter of 2022, according to data from Morningstar, up from US$ 1 trillion in 2019. According to the consultancy, taking into account only the United States, 65 funds were repackaged as ESG.
In Brazil, there are around 45 equity funds that fall into the sustainability and governance category, with a net worth of R$1.8 billion, according to data collected in April by the Brazilian Association of Financial and Capital Market Entities (Anbima) .
The SEC has already signaled that it will pay more attention to the issue of funds that sell themselves as ESG. On Monday, May 23, the agency reported that the investment advisory division of BNY Mellon had agreed to pay a fine of $1.5 million to settle a case over allegations of failure to omit ESG precepts in decisions. on allocation of funds.