WASHINGTON – The Securities and Exchange Commission (SEC), which regulates the US financial industry, has brought in new rules to crack down on greenwashing and misleading marketing practices by US investment funds. Under the guidelines, mutual and exchange traded funds that market their environmental, social and governance (ESG) credentials will need to have 80 per cent of their assets in line with their names.
The rule change targets funds which are attempting to cash in on growth of investor interest in ESG, investing with names that do not accurately reflect its investments or strategies. The ruling also targets the misleading use of other terms such as artificial intelligence.
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