ADGM’s regulator tightens guidelines for ESG investment vehicles

Abu Dhabi’s financial watchdog strengthens ESG finance framework: The Financial Services Regulatory Authority (FSRA) of the ADGM has issued new guidance (pdf) clarifying rules for the management and marketing of environmental, social, and governance (ESG)-focused investment vehicles and services. The new guidelines aim to reduce greenwashing risks by ensuring that ESG [products are marketed transparently, while also promoting consistent ESG disclosures in line with global practices.

Background: In May, ADGM released a consultation paper (pdf) seeking feedback on proposed updates to its sustainable finance regulatory framework.

Among the guidelines:

• ESG investment vehicles must clearly outline their sustainability strategies, goals and performance in official sales and marketing documents;
• Firms are encouraged to receive third-party checks to validate their ESG fund claims, with the exception of funds tracking ESG indices and qualified investors;
• ESG funds are also encouraged to disclose their benchmark indices’ providers, as well as their selection criteria, and conflicts of interest.