By Huw Jones
LONDON, Sept 6 (Reuters) - BlackRock, Fidelity, Legal &
General, M&G and abrdn are among 125 firms endorsed under
Britain's tougher best practice code to stop "greenwashing" by
asset managers, though 64 peers failed to make the grade, the
Financial Reporting Council said on Monday.
Asset managers are under greater scrutiny from securities
regulators globally to prevent "greenwashing" or exaggerating
the climate-friendly credentials of their products to investors.
The FRC beefed up its decade-old stewardship code in 2020 to
stop "boiler plate" statements about investment decision-making
that it said did little to show if investors were getting value
for money.
The code is enforced on a comply or explain basis, meaning
firms must say publicly why they are not applying it.
The revised code says asset managers should not only spell
out their actions in selecting investments, such as meetings
with companies, voting at annual meetings, but also provide
evidence on what the outcomes of those actions were, a step
change.
As Britain seeks to promote London as a global centre for
sustainable investment, there is a strong emphasis on taking
environmental, social and governance (ESG) factors into account
when investing.
The volume of money going into ESG products has risen
significantly, raising fears among regulators of "greenwashing".
All 300 asset managers who were signatories to the old code
had to reapply, and the FRC said it received 189 applications,
with an inability to provide proper evidence on outcomes a key
reason why 64 firms failed to become signatories.
The 125 signatories have a combined 20 trillion pounds
($27.7 trillion) under management, while the total for all 189
applicants was 32 trillion pounds.
Several blue-chip names are not among the signatories but it
is unclear if they applied. Some who failed to make the grade
are expected to reapply in October, or April next year.
"To remain signatories, organisations will need to continue
to improve their reporting as market practice and expectations
evolve," the FRC said.
Firms that signed up to the code must state that on their
website.
$1 = 0.7230 pounds)
(Reporting by Huw Jones; Editing by Emelia Sithole-Matarise)