FI Supervision 6: Sustainability Information in Funds

2018-11-07 | Reports

The fund industry has created through its self-regulation an information standard that fund managers must use when providing the information needed for a consumer to understand a fund’s management with regard to sustainability. Finansinspektionen (FI) conducted a survey in the summer of 2018 to follow up on and evaluate the industry’s self-regulation in the area.

Since 1 January 2018 new information requirements have been in effect to make it easier for consumers to select funds that prioritise sustainability. Good transparency in the area is a prerequisite for consumers to be able to make well-informed investment decisions.

As a whole, FI's survey shows that there are good conditions in place for continued self-regulation in the area. However, this assumes that the industry continues to develop the information standard and adapt it to the needs of consumers.

  • The information standard is a good start
    The standard builds on extensive work carried out by specialists in sustainable investments. The methods used in the standard, for example, are established in the area. The standard is also strongly rooted in the industry, and almost 90 per cent of the fund managers in the survey who have said that they consider sustainability in at least one of their funds use the standard.
  • The standard allows too much room for individual interpretation by the fund managers
    FI's survey shows that the information standard needs to be further developed to ensure uniform application by the fund managers. The industry needs to jointly establish which criteria the fund managers must fulfil to be allowed to specify the various methods in the information standard. The industry also needs to evaluate whether its bar for when funds consider sustainability or not is set too low. The standard should also be developed so the information provides the proper expectation of the sustainability work that is actually carried out in the fund.
  • Adapt the information standard to the needs of consumers
    FI conducted focus group interviews with consumers. These interviews show that consumers consider the standardised information to be unclear and thus difficult to understand. The information in the standard needs to be simplified, and terms and expressions must be clarified so that the average consumer can understand them. FI is therefore able to determine that there is still some work for the industry to do in this area.

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