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Are Your Funds ‘Green’?

Checking sustainability ratings can be a way to avoid greenwashing.

Kate Lin, CAIA 30 April, 2021 | 9:52
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Greenwashing

A slew of recent fund launches, branded with ESG (environmental, social and governance) investment strategies, have caught the attention of Asian regulators, especially in Hong Kong and Singapore. The regulators want to ensure that there’s no ‘greenwashing’, a process in which a company markets itself as environmentally sound, or claims to adhere to ESG factors, while not actually doing so. Several areas are now in focus, including the lack of common standards and definitions, the resultant comparability issues, and disclosures.

The Securities and Futures Commission of Hong Kong established a steering group for green finance development. With an aim to mitigate disclosure and comparability issues, the watchdog compiles a list of funds with ‘green’ or ‘ESG’ investment objectives that meet globally recognized green or ESG criteria or principles, such as the United Nations Sustainable Development Goals. Similarly, in Singapore, the regulator has stepped up research into technical areas of climate and relevant rating capabilities. An environmental risk management framework is also available for asset managers to reference.

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About Author

Kate Lin, CAIA

Kate Lin, CAIA  is a Data Journalist for Morningstar Asia, and is based in Hong Kong

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