Proposed new rules from the U.K.’s Financial Conduct Authority (FCA) to combat greenwashing are a positive for asset managers, says Moody’s Investors Service.
Last week, the FCA issued proposals for new disclosure and labelling requirements for “sustainable” investment products.
While the proposals aren’t final, Moody’s said the initiative is a positive for the fund industry “because it will create a more robust labeling and disclosure framework for UK asset managers and boost consumer confidence in sustainable investing, supporting the industry’s growth and revenue expansion.”
Alongside product labelling and disclosure rules for fund managers, the FCA is also proposing requirements for distributors and a general anti-greenwashing rule that would apply to all registered firms.
“According to the FCA, the proposed rules will help consumers navigate an increasingly complex investment product landscape, protect them from greenwashing and rebuild trust,” the rating agency noted.
In addition to boosting investor confidence, the proposed regime would also “improve consistency and comparability across investment products,” Moody’s said, adding that this would be a positive for U.K. asset managers.
However, the report also noted that “the lack of a common global regulatory framework will remain a challenge for investment firms.”
As regulators in different regions take different approaches to anti-greenwashing rules, firms will likely face added compliance costs from adhering to different requirements.