LONDON (Reuters) – Britain’s markets watchdog set out ideas on Wednesday to improve labelling of investment products that tout their ‘green’ credentials.
The flow of cash into products that claim to meet environment, social and governance (ESG) considerations favoured by ethical investors has rocketed over the past year, raising concerns among regulators over ‘greenwashing’ or exaggerated green credentials.
The Financial Conduct Authority (FCA) said that without common labelling standards there was a risk consumers become confused by the array of choices and unable to assess the suitability of a product.
“Certain investment products will be required to display a label reflecting their sustainability characteristics,” the FCA said in a discussion paper ahead of firm proposals that will be put out to public consultation in the second quarter of next year.
The paper sets out criteria that could be used by asset managers and investment firms for labelling products.
(Reporting by Huw Jones; Editing by Mark Potter)
