MPs set to scrutinise ESG industry amid greenwashing concerns
MPs are set to scrutinise the environmental, social and governance (ESG) investing industry next week amid growing concerns of ‘greenwashing’.
The Business, Energy and Industrial Strategy (BEIS) Committee said yesterday it will examine the “growing global market” as investors and regulators grapple with how to effectively measure the quality of ESG investing.
There are “questions about the extent to which companies may be using ESG disclosures to mislead or “greenwash” investors about the extent to which they behave ethically,” the committee said in a statement today.
The move comes amid fears of marketeers exploiting the label to draw in cash with a lack of standards and regulatory oversight.
UK regulators have been looking to clampdown on the the space, with mandatory climate disclosures introduced by the Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).
The FCA also backed a move to bring the labelling of ESG products within its remit, and regulators have introduced a system of mandatory disclosures that were developed by the Task Force on Climate-related Financial Disclosures.
Witnesses from regulators and academics are set to be quizzed by at the committee hearing on how ESG is influencing investors, and how its systems for reporting and auditing could be improved.