FMA ratchets up its campaign for better ESG disclosure from fund managers
This follows the release earlier this month of a review and survey of 14 KiwiSaver and other managed funds, benchmarked against ESG investment guidance issued by the regulator in December 2020. This guidance included a framework the FMA expects funds to use to show they can substantiate the ethical credentials of their products.
The report found investors were confused and overwhelmed by the technical jargon in disclosure materials and often gave up their search for ethical investments. Of the 2500 people who responded to the FMA’s survey, 68% said they wanted ethical and responsible investments but only 26% had actually bought into these funds.
Paul Gregory, the FMA’s director of investment management, says disclosure documents must be written more clearly and crisply so prospective investors can understand them and make informed choices.
“The simpler it is, the easier it is to understand and for investors to substantiate,” Gregory says. “It’s up to fund manager to have their own processes. They just need to explain it well and prove it. They just can’t pretend to be impressive and lie about it.”
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