While the last 2-3 years saw a rampant growth of ESG funds, concerns about greenwashing started rising in 2021. Even as the world continues to evolve the investing framework and regulation on it, there have been instances of mislabeling. Some of the developments this year in ESG have been on the Regulation front. Incremental regulation and scrutiny is amping up the crackdown on Greenwashing.

While the EU’s SFDR (sustainable finance disclosure regulation) rules came into force in 2021, the updated guidance earlier this year has created a massive stir amongst big investment firms world over. It made them reclassify their funds, with assets of trillions of dollars being downgraded from ‘article 9’ to ‘article 8’.

The Securities and Exchange Commission (SEC) in the US, created the Climate and ESG Task Force within the Division of Enforcement to identify “material gaps or misstatements in issuers' disclosure of climate risks under existing rules, and disclosure and compliance issues relating to investment advisers' and funds' ESG strategies." The SEC is actively scrutinizing ESG claims by corporates as well as registered investment firms and advisers.

In this episode, I take an overview on :

a) What is greenwashing, its examples

b) Key regulation that is facilitating the ESG ecosystem world over, including

- EU taxonomy

- SFDR

- Low carbon benchmarks regulation

- Green bond standards and other labels