- FSA looking at new labeling rules to avoid ‘greenwashing’
- Morgan Stanley-managed fund had provided limited ESG details
A popular ESG fund in Japan managed by Morgan Stanley and sold by Mizuho Financial is triggering an industry-wide review by regulators who are looking into new rules for mutual funds to protect investors from possible “greenwashing.”
Japan’s Financial Services Agency may start discussions with asset management firms and fund distributors by June about whether there should be rules for mutual fund labels, according to FSA officials who spoke on condition they not be identified. One of the goals is to prevent firms from exaggerating or misrepresenting the environmental, social or governance benefits of their funds to attract investors, the people said.
The FSA’s move was partly triggered by the Global ESG High Quality Growth Equity Fund, a 1 trillion yen ($9.4 billion) mutual fund owned by Mizuho Financial Group Inc.’s Asset Management One Co. and managed by New York-based Morgan Stanley, the officials said.
According to the FSA, the fund initially offered investors insufficient information about its environmental and social impact, the officials said. The mutual fund is one of the largest of its kind in Asia, and quickly caught on with Japanese investors after launching in July.
After discussions with the FSA, Asset Management One in January began including more ESG details in a monthly update, the officials said. The report now explains ESG-related efforts being made by the 10 biggest holdings in the fund, including Amazon.com Inc., Uber Technologies Inc. and Mastercard Inc. The FSA officials said Mizuho didn’t break any rules with its disclosure.
Asset Management One has improved disclosure for the fund with a revised prospectus and enhanced monthly reports, a spokesperson said in an emailed statement. A representative for Morgan Stanley said they were not in a position to comment on the naming of the fund.
You could find more about this article on the website bloomberg.com HERE – Authors: Takashi Nakamichi, Takako Taniguchi