How well are ethical managers managing their strategies?

The regulator has completed a review looking at how managed investment scheme managers present information on their ethical investment strategies and ensuring alignment with regulatory requirements. It did not find any cases of greenwashing, but highlighted some concerns.

It found that many managers were not clearly explaining their ethical investment strategies. Issues identified include using ethical labels without detailing the underlying strategies, unclear application of ethical scoring systems, and a lack of information on actions taken when investments no longer comply with ethical criteria.

The report highlights instances where advertising and reporting did not align with ethical investing policies, lacked clarity on planned activities (such as carbon offsetting), or failed to provide regular updates on progress toward ethical targets (like net-zero emissions). The FMA engaged with these managers to improve transparency and accuracy.

The FMA reviewed certain funds to determine whether their holdings complied with the managers' stated exclusion policies (eg: excluding tobacco or fossil fuels). While most managers could provide adequate explanations, some chose to divest questionable assets to avoid risk or doubt.