Arming investors to guard against greenwashing

IOSCO notes that regulators around the world have “increasingly focused on whether claims about sustainable finance are accurate and whether investors have the information they need to evaluate sustainable finance products. sustainable finance”.

Among other things, the report says “regulators should consider” educational activities for both retail investors and the industry, including:

  • education designed to ensure that investors know how to obtain sustainability-related information and determine whether specific products match their sustainability preferences;
  • supporting industry efforts to help investors understand ESG certifications, labeling and ratings;
  • and training advisors on greenwashing and investor protection.

The report also identifies some of the challenges, and best practices, for developing educational content in this area.

“Financial education is a key element in enhancing investor protection, and it complements the policies, regulations, oversight and enforcement actions that securities regulators can take to support the healthy and proper development of markets. and sustainable finance products,” said Ashley Alder, Chairman of the Board of IOSCO and CEO of the Hong Kong Securities and Futures Commission (SFC), in a statement.

“Financial education also increases investor confidence to participate in innovative financial markets, such as sustainable finance, on a properly informed basis,” he adds.

“Sustainable finance offers new opportunities for retail investors, locally and globally,” said Pasquale Munafò, Chairman of IOSCO’s Retail Investors Committee. But it is crucial that they understand what a sustainable product is, and its various opportunities and risks, including the threat of greenwashing. »

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