In relation to the management of sustainability-related collective investment schemes, FINMA’s focus in preventing and combating greenwashing is on the following areas: i. sustainability-related information at the fund level (figure 2 below) and ii. suitable organisational structure at the institutional level for managing such products (figure 3 below).
Preventing and combating greenwashing
Regulatory Extracts from this
FINMA aims, to the extent that it is empowered to do so, to protect investors and clients from improper business conduct and to ensure that they are not deceived regarding the alleged sustainability of products and financial services. In relation to the management of sustainability-related collective investment schemes, FINMA’s focus in preventing and combating greenwashing is on the following areas: i. sustainability-related information at the fund level and ii. suitable organisational structure at the institutional level for managing such products.
Attributes such as “sustainable”, “green” or “ESG” can appeal to investors for whom sustainability characteristics are an essential criterion when making an investment decision. In particular, if a Swiss collective investment scheme is described in such a way or if a link to sustainability is established via another means, FINMA will pay particular attention to the information provided about the advertised sustainability characteristics when approving and supervising it. It will ensure that these are appropriately disclosed and will check that investors are not deceived regarding sustainable characteristics. The fund documents for Swiss collective investment schemes must therefore contain the information required for investors to make an informed investment decision. In view of the large number of possible sustainability strategies, thematic orientations and due to the lack of general definitions, classifications and measurement methods, establishing transparency for sustainability-related Swiss collective investment schemes poses a challenge, but is essential to protect investors. FINMA informed fund management companies about its expectations regarding the content of fund documents for sustainability-related Swiss collective investment schemes in February 2021.
In practice, FINMA regards the following scenarios as greenwashing (deception) in the area of Swiss collective investment schemes or at least sees a potential greenwashing risk due to the lack of transparency vis-à-vis investors if the collective investment scheme makes reference to sustainability: • although no sustainable investment strategy/policy is actually pursued. • and information about the sustainability approach used is provided in the investment strategy/policy (e.g. best-in-class approach, approach integrating ESG considerations, stewardship), but the stated approach is not implemented. • but the investment policy allows for a significant proportion of nonsustainable investments, which are not in line with the sustainability approach pursued or are even inconsistent with it. • but the investment strategy/policy is only deemed to be sustainable because of exclusionary criteria that are already widespread, without there being a specific sustainability component going beyond this. • by using terms such as “impact” or “zero carbon” without the stated impact or savings being capable of being measured or verified. • but the fund documents do not provide or only provide very general information about the corresponding investment strategy/policy and/or the selection of permitted investments, along with how sustainability considerations are integrated into the investment decision process. Investors are not able to gain an impression of how sustainability is taken into account due to the lack of detail or transparency.
Retrospective sustainability reports should be published setting out clearly and transparently for investors to what extent a sustainability-related Swiss collective investment scheme has achieved its sustainability goals. To promote good practice and ensure that investors are adequately informed, FINMA therefore recommends that a high degree of transparency is applied in sustainability reporting for sustainability-related Swiss collective investment schemes.
Institutions that manage collective investment schemes must be suitably organised. […] FINMA takes account of aspects such as the following when assessing whether it is suitably organised: • Investment decision process/investment controlling/risk management: Attention must be paid to integrating and observing sustainability-related considerations during the investment decision process. These should also be reviewed as part of independent monitoring of risks. • Specialist expertise and knowledge: It should be ensured that the requisite specialist expertise and the necessary knowledge in the area of sustainability is present not only within the body for governance, supervision and control, but also across the operational level as a whole. • Sustainability strategy: It should be ensured that the body for governance, supervision and control specifies the relevant strategy in relation to sustainability. • Sustainability-related data, tools and ratings: When selecting and using external sustainability-related data and analyses, tools and ratings, adequate assessment and monitoring of the data providers and validation of the corresponding information should be ensured. The adequacy of the organisational structure is dependent, in particular, on the sustainable strategy for the sustainability-related Swiss or foreign collective investment scheme being guaranteed and also on sustainability risks being captured as part of the risk management process, alongside the traditional investment risks.
The advisory process (at the point of sale) can also pose greenwashing risks if sustainability-related financial products are offered. These risks should be limited by financial service providers, particularly in view of their potential civil liability. […] The FinSA does not include any specific duties that indicate how a client’s sustainability-specific preferences should be taken into account at the point of sale […]. In this context, the Guideline for the integration of ESG considerations into the advisory process for private clients published by the Swiss Bankers Association in June 2020 should be referred to […].
No definitions available.