The Austrian Financial Market Authority (FMA) will examine to a greater extent information relating to sustainable investment products to fight greenwashing as a result of new disclosure rules coming into force in the European Union from 1 January, it said in a statement.
The regulator will take a much closer look at investment products based on the criteria set in the Delegated Regulation adding to the Sustainable Financial Disclosure Regulation (SFDR), to improve transparency in investment decisions, it added.
The rules in the Delegated Regulation to the SFDR, which came into force on 1 January, would lead to greater transparency in terms of sustainability-related information, and help comparing information, the regulator said.
The Delegated Regulation adds to the SFDR with regulatory technical standards to give details on products to ensure that the information disclosed can be compared, specifying the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts.
This is an improvement compared with disclosures carried out so far under the SFDR’s rules, that were open for interpretation, according to the FMA, increasing the risks of misleading investors on decision-making relating to sustainable investment products and making it difficult to compare information, the regulator explained.
According to the FMA, the Delegated Regulation instead specifies the content, methods and presentation of information in a “practical and precise manner”.
Financial service providers are required to disclose indicators based on a standard format on their websites reflecting the main adverse impacts of an investment decision on sustainability factors, including carbon footprint, greenhouse gas emission intensity of invested entities, the share of investments in companies active in the field of fossil fuels or in properties with inadequate energy efficiency, it said.
The Regulation prescribes standardised forms of disclosure obligations in mandatory pre-contractual information, for example funds prospectuses, about financial products, to give details on the share of investments with an environmental objective, or socially relevant investments, in line with the taxonomy.
The vast majority of management companies of investment funds, real estate funds, and life insurers in Austria offer financial products featuring sustainability criteria, falling under the SFDR, according to the FMA.
More than one-third, 40% or €78.2bn, of the total net asset value of Austrian funds was managed in funds investing according to sustainability criteria, as of September last year, up from close to 25% in mid-2021.