Is an emerging ESG vocabulary the key to stamping out greenwashing? – Wealth Professional

Is an emerging ESG vocabulary the key to stamping out greenwashing? Wealth ProfessionalIs an emerging ESG vocabulary the key to stamping out greenwashing? Wealth ProfessionalIs an emerging ESG vocabulary the key to stamping out greenwashing? Wealth Professional

Fund companies all over the globe have been releasing new “green”-labelled products to appeal to the climate-conscious investor in an effort to capitalize on ESG investing opportunities. While both proponents and critics of ESG recognize that greenwashing poses a serious threat, MSCI’s report suggests that there are ways to clarify sustainability terminology. In its 2022 ESG Trends to Watch Report, index provider MSCI stated that institutional investors can already use a variety of tools to evaluate a fund. These include the PRI’s transparency report, disclosure standards from the CFA Institute, and MSCI ESG Fund Ratings. Retail investors in North America are also benefiting from these tools. “In the U.S. the Securities and Exchange Commission has put on notice the investment industry with pronouncements and bulletins highlighting deficiencies and practices in funds’ ESG claims examinations,” MSCI stated. “Our research suggests that the EU’s Sustainable Finance Disclosure Regulation (SFDR), classifications (Articles 6-8 and 9) are strengthening disclosures in Europe’s ESG funds,” MSCI stated. MSCI stated that investors will soon be able to make better informed decisions and avoid greenwashing by having disclosures about a fund’s ESG objectives, approach(es), and quantitative financial and other characteristics.

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