‘Green-washing’ could undermine investor confidence in integrated financial products – FMA

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Promoters and backers of financial products based on environmental, ethical, and social investments are being warned they need to comply with capital market regulations.

Close-up of New Zealand fifty dollar banknotes

Photo: 123RF

The Financial Markets Authority has established guidelines for issuers of integrated financial products as demand for ethically responsible products continues to grow.

“Misleading marketing, poor product design and other types of ‘green-washing’ all have the potential to undermine investor confidence in integrated financial products,” FMA capital markets director Sarah Vrede said.

“We plan to do more to help investors understand such products, and likewise expect issuers to also arm investors with the information they need to decide if their products’ objectives and claims align with each investors’ expectations and values.”

Vrede said the FMA had a range of enforcement tools it could use to address false, misleading, deceptive or confusing behaviour by issuers of integrated financial products.

“At the upper end, we can issue a stop order or direction order, which can force a business to take certain steps to rectify or withdraw an offer,” she said, adding that more serious breaches may result in the FMA taking court action.

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