Finansinspektionen to Review Sustainable Funds

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    Stockholm (NordSIP) – As the demand for green and other sustainable investments continues to increase, financial services authorities must tackle the the risk of greenwashing. To address this concern in the aftermath of last year’s adoption of the EU’s Sustainable Finance Disclosures Regulation (SFDR), Sweden’s Finansinspektionen (FI) announced on Tuesday, April 13th, it will “review whether the information provided about the funds that are classified as most sustainable lives up to the strict requirements that are set.”

    Johanna Fager Wettergren, Sustainability Manager

    “For consumers and investors, it is important that it is possible to trust the information that is available,” Johanna Fager Wettergren (Pictured), sustainability manager at FI said on this occasion. “This applies in particular to the funds that want to appear to be the most sustainable, as there is a great demand for this type of fund.”

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    FI has identified greenwashing as one of the biggest risks in the financial sector for 2022. “Finansinspektionen will have three main priorities for sustainable finance in 2022: New regulations, supervisory activities and global cooperation,” Wettergren told NordSIP at the start of the year. “Supervision is one of the most important tools that FI has for carrying out its assignment. To the greatest extent possible it will be risk-based. For 2022 we will focus on two risks: greenwashing and transition risk.”

    The announcement also follows confirmation by Wettergren that supervisory plans are moving along as expected. “So far, the work is progressing at a fast speed and according to the plan,” Wettergren reiterated to NordSIP in this year’s publication on EU sustainable finance regulation, noting that the international events in the intervening months did not affect FI’s plans. “The plan is intact, we stick to our top priorities,” she explains. However, the Swedish FSA is not oblivious to the ongoing geopolitical turmoil.

    However, FI is not oblivious to the ongoing war in the Ukraine. “The Russian invasion of Ukraine is bringing a catastrophic loss of life, human suffering and political and economic disruptions on a global scale. (…) The crisis has not yet forced us to re-prioritize our planned work on sustainable finance, though the development is putting more focus on the ‘S’ in the ESG,” Wettergren continued.

    Under the SFDR’s classification, Article 9 funds – funds that have sustainable investments as targets – have the strictest disclosure requirements. One of the main focuses of the Swedish FSA’s in-depth analysis will be to review whether the information that fund managers provide to investors regarding their Article 9 funds meets the regulatory requirements. This includes reviewing information brochures and fund regulations to assess whether the information meets the requirements for the most sustainable funds.

    The in-depth analysis is expected to be completed before the summer. The analysis will also form a basis for continued dialogue with the industry to guide the work with the new regulations.

    Images courtesy of Pixabay and Finansinspektionen
    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.
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