On November 3, 2021, FINMA published important guidance on preventing as well as combating greenwashing | sustainable, green, ESG (Environmental, Social, Governance)

On November 3, 2021, FINMA published important guidance on preventing as well as combating greenwashing | sustainable, green, ESG (Environmental, Social, Governance)

Thursday, 4 November, 2021

As demand for sustainable financial products is increasing, yesterday, on November 3, 2021, FINMA published important guidance on preventing on combating greenwashing. We can see that FINMA focuses more on the field of sustainability. And it is in this perspective that it is taking numerous initiatives on a national and international level to achieve these objectives. Current guidance is subjected to the sustainability-related financial products that are claiming to be "sustainable", "green" or "ESG" (environmental, social, governance).

 

In the sense of sustainability management related to collective investments, it has focused on the prevention and the fight against greenwashing on certain points. Also, it will pay special attention to the information on sustainability during the authorization and monitoring. FINMA has informed the fund management of these expectations.

 

FINMA regards the following scenarios as greenwashing (deception) in the area of Swiss collective investment schemes:

 

  • The collective investment scheme makes reference to sustainability, although no sustainable investment strategy/policy is actually pursued. 
  • The collective investment scheme makes reference to sustainability and information about the sustainability approach used is provided in the investment strategy/policy (e.g. best-in-class approach, approach integrating ESG considerations, stewardship), but the stated approach is not implemented. 
  • The collective investment scheme makes reference to sustainability, but the investment policy allows for a significant proportion of non-sustainable investments, which are not in line with the sustainability approach pursued or are even inconsistent with it. 
  • The collective investment scheme makes reference to sustainability, but the investment strategy/policy is only deemed to be sustainable because of exclusionary criteria that are already widespread, without there being a specific sustainability component going beyond this. 
  • The collective investment scheme makes reference to sustainability by using terms such as “impact” or  "zero carbon" without the stated impact or savings being capable of being measured or verified. 
  • The collective investment scheme makes reference to sustainability, but the fund documents do not provide or only provide very general information about the corresponding investment strategy/policy and/or the selection of permitted investments, along with how sustainability considerations are integrated into the investment decision process. 

 

FINMA takes account of  aspects such as the following when assessing whether it is suitably organized:

 

  1. Investment decision process/investment controlling/risk management.
  2. Specialist expertise and knowledge.
  3. Sustainability strategy.
  4. Sustainability-related data, tools, and ratings.

 

FINMA is following the developments in this area, supporting the State Secretariat for International Finance SIF in the ongoing work.

 

Source:

 

https://www.finma.ch/en/news/2021/11/20211103-finma-aufsichtsmitteilung-05-21/

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