04 November 2021

Setting regulatory and supervisory expectations for asset managers is fundamental to address greenwashing concerns, says IOSCO

There have been challenges associated with the growth of ESG investing and sustainability-related products in recent years, including a greater need for consistent, comparable, anddecision-useful information and the risk of greenwashing.

The Board of the International Organization of Securities Commissions (IOSCO) has published
today a set of recommendations about sustainability-related practices, policies, procedures and
disclosures in the asset management industry.

Ashley Alder, Chairman of IOSCO and CEO of the Hong Kong SFC said that “Asset
managers, who are a critical part of the sustainable finance ecosystem, play a major role in
helping investors achieve their investment objectives. Regulatory guidance on how asset
managers consider material sustainability-related risks and opportunities, integrate them into
the decision-making process, and make disclosures, will allow investors to understand the
impact of their investments.”

There have been challenges associated with the growth of ESG investing and sustainability-
related products in recent years, including a greater need for consistent, comparable, and
decision-useful information and the risk of greenwashing. The report, which reflects the
feedback received in response to the consultation report that was published in June 2021,
focuses on these investor protection issues and covers five areas: asset manager practices,
policies, procedures and disclosure; product disclosure; supervision and enforcement; terminology; and financial and investor education.

The report also recognizes a clear need to address the challenges associated with the lack of
reliability and comparability of data at the corporate issuer level and the ESG data and ratings
provided by third-party providers to enable the investment industry to properly evaluate
sustainability-related risks and opportunities. The Report on Sustainability-related Issuer Disclosures, which was published in June this year, addresses data gaps at the corporate issuer level. A separate IOSCO report will be published later in November and will cover recommendations for ESG data and ratings providers.


Erik Thedéen, head of the Swedish Financial Supervisory Authority, is the Chair of the
Sustainable Finance Taskforce set up by the IOSCO Board, which issued this report. He
commented: “Our common objectives as securities regulators are to protect investors, as well
as to support market integrity, by ensuring transparency and disclosure of information that is
material to investment decisions. Improving underlying data is critical but not sufficient if asset
managers do not properly integrate sustainability risks into their risk management procedures
– or if they misrepresent the ESG features or performance of their funds to their investors.
Setting regulatory and supervisory expectations is therefore fundamental to addressing issues
relating to risk mismanagement and greenwashing. This report sets out IOSCO ́s view of what
these expectations should be to support asset managers in addressing current challenges.”


Greenwashing refers to the practice by asset managers of misrepresenting their sustainability-
related practices or the sustainability-related features of their investment products. Such
practices may vary in scope and severity, from the inappropriate use of specific sustainability-
related terms used in an offering document, to misrepresentations about an entity’s
sustainability-related commitments, to deceptive marketing practices that deliberately
misrepresent a product’s sustainable impact.

IOSCO

© IOSCO