Switzerland to Introduce Sustainable Fund Label Rules
The Swiss Federal Council is to implement new sustainable fund rules for asset managers who name their products "sustainable," "green," or "ESG" to combat "greenwashing."
Under new plans from the Swiss Federal Council, asset managers will have to say how the fund meets the goal. This will give investors a clearer picture of how to invest in a way that is good for the environment.
It comes at a time when financial regulators around the world are trying to stop greenwashing, especially in the names of funds, which have been seen as a "powerful marketing tool" for asset managers.
In November 2022, the European Securities and Markets Authority (ESMA) proposed new rules for how ESG-related funds should be named to "address any misuse" of the Sustainable Finance Disclosure Regulation (SFDR).
A month earlier, the Financial Conduct Authority (FCA) suggested a slew of new measures to increase consumer trust, including sustainable investment labelling and customer-facing disclosures.
Now, the Swiss Federal Council is the latest government body to suggest similar rules.
According to the proposals, financial products labelled as sustainable must align with one or more specific sustainability goals, such as equities and bonds of companies that are aligned with the Paris Agreement climate targets.
Alternatively, the funds must help reach one or more specific sustainability goals. This is called "impact investing," and examples include direct investments in new ways to get renewable energy.
The Swiss regulator also said that sustainable goals should be set "using the broadest possible reference framework," like the Sustainable Development Goals set by the United Nations.
It also said that the information should be "public, easily accessible, clear, and comparable," and that relevant indicators should be "reported on efficiently and correctly."
However, the plans will likely not be introduced until beyond 2023.
The Swiss Federal Council said it will set up a working group to come up with "concrete proposals" by September 30, 2023.
Source: ETF Stream
