FI reviews sustainable funds

Demand for green and sustainable investments is increasing rapidly. This increases the risk of greenwashing, i.e. presenting organisations and products as more sustainable than what they are in reality. Finansinspektionen (FI) will therefore review that the disclosures provided about the funds classified as the most sustainable fulfil the strict requirements placed on them.

The financial sector can play a central role in the climate transition and contribute to a sustainable development. But this requires that investors can trust that green investments are as green as they are presented. Preventing greenwashing is therefore key in maintaining confidence in sustainable investments.

In March of last year, new rules went into effect for the type of sustainability-related disclosures that financial firms must make to investors (SFDR). The rules include, for example, specific requirements on funds that classify themselves as sustainable. The strictest requirements are placed on the funds that have sustainable investments as their objective, so-called Article 9 funds.

Therefore, through an in-depth analysis, we will review whether the disclosures fund managers make to investors about their Article 9 funds fulfil the requirements. This will require going through key investor information documents (KIID) and fund rules to assess whether the disclosures meet the requirements placed on the most sustainable funds.

"Consumers and investors need to be able to trust the disclosures," says Johanna Fager Wettergren, head of sustainable finance at FI. "This applies in particular to funds that aim to distinguish themselves as the most sustainable since there is strong demand for this type of fund."

The analysis can also be used as a basis for continued dialogue with the industry to guide the work on the new regulations.

FI has identified greenwashing as one of the largest risks in the financial sector for 2022. It is therefore one of the five prioritized areas that FI will review in more detail during the year. The in-depth analysis is expected to be completed before the summer.