The Managed Funds Association (MFA) has urged the U.S. Securities and Exchange Commission (SEC) to consider the EU experience with sustainability regulation and its potential contribution to greenwashing, as it devises its proposed ESG disclosure rules.
In an October 30 letter, the association which represents the global alternative investment industry, called on the SEC to consider the European Commission’s experience with Sustainable Finance Disclosures Regulation (SFDR) and the ways in which it “now acknowledges that the SFDR’s classification regime has in fact potentially contributed to greenwashing rather than mitigating it.”
Pointing to post-implementation problems with the SFDR guidelines, MFA said that the EC has indicated its desire to revisit Articles 8 and 9 of SFDR, noting they “are being used as de facto product labels” and that “there are persistent concerns that the current market use of the SFDR as a labelling scheme might lead to risks of greenwashing.”
“These problems that the EC has identified with the current SFDR framework are strikingly similar to those that MFA and other industry stakeholders have flagged with the ESG framework proposed by the commission,” the representative body noted.
The comment letter supplemented another submitted to the SEC in August.