FirstFT: the SEC will crack down on “greenwashing” by funds

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The US securities regulator is set to crack down on overblown environmental, social and governance credentials in investment products, preparing standards for a sustainable fund industry that has exploded to nearly $3 billion.

The United States Securities and Exchange Commission yesterday announced its intention to fine BNY Mellon’s investment advisory division $1.5 million for allegedly inaccurate and omitted information about environmental investment considerations , social and governance issues for the mutual funds it managed.

The case marks the first time the SEC has settled with an investment adviser over ESG reporting and comes as the agency is set to propose rules setting out how financial firms can apply ESG or other green labels for investment funds.

Global sustainable fund assets totaled $2.77 billion at the end of the first quarter of 2022, up from $1 billion in 2019, according to Morningstar, a data provider.

“Greenwashing is a huge problem, and the SEC is right to deal with it,” said Jonathan Macey, a professor at Yale Law School.

Do you support the SEC’s planned crackdown on ESG funds? Email your thoughts to firstft@ft.com and for regular updates on ESG investing, subscribe to our Moral Money Newsletter. Thanks for reading and here’s the rest of the news from the day – Gordon.

1. Snap scares off investors Snap shares lost a third of their value in premarket trading after the social media group said in an unannounced earnings warning after the market closed yesterday that it would be stung by deteriorating macro conditions. Separately, Airbnb will close its operations in China, the online travel group announced. Bookings have been strangled by the country’s tough zero-Covid strategy.

2. Quad unveils maritime satellite initiative to counter China The United States, Japan, Australia and India have launched a satellite initiative to help countries in the Indo-Pacific region track illegal fishing and unconventional maritime militias, in their latest effort to counter the China.

3. “Shameful” Russian Diplomat Resigns Over Ukraine War Boris Bondarev, arms control adviser to the Russian UN mission in Geneva, resigned yesterday in protest against Moscow’s invasion of Ukraine. The diplomat said he was “ashamed” of his country in a statement posted on social media. Starbucks, meanwhile, became the latest American consumer brand to leave Russia.

4. Banks and funds store a record $2 billion overnight in Fed facilities Money market funds and banks deposited more than $2 billion with the Federal Reserve yesterday, according to figures released by the Federal Reserve Bank of New York. Meanwhile, commodity-linked investment vehicles such as oil, wheat, fertilizer and cooking oil are making a comeback after years of falling out of favor as institutional investors seek hedges against stubbornly high global inflation. .

Line chart of GSCI spot indices showing commodity price spike in 2022

5. Crypto Ties to Banks Pose a ‘Financial Stability Risk’ The crypto industry’s deepening ties to banks and asset managers will pose a threat to financial stability, the European Central Bank has warned. The comments are the first warning from the ECB, but follow similar messages from US and UK authorities, who have been troubled by a series of recent failures in the crypto market.

The day ahead

Primary elections The victory of 28-year-old progressive activist Jessica Cisneros in Texas would suggest a left turn for the Democrats while in Georgia, Republican Gov. Brian Kemp appears to be holding Donald Trump-backed challenger David Perdue at bay. Alabama, Arkansas and Minnesota are also holding primaries.

Market outlook After yesterday’s rally, it looks like Wall Street stocks will be back in the red today when trading begins. The Snap warning unsettled tech investors, Meta, Twitter and Pinterest, owners of Facebook, all seeing steep declines in pre-market trading.

American profits Consumer tech retailer Best Buy is expected to report lower first-quarter revenue from a year ago, with investors likely to pay attention to whether the company has seen consumers hold back their expenses due to soaring inflation. Luxury fashion retailer Ralph Lauren is also expected to report earnings.

Economic data Economists forecast U.S. new home sales fell to 750,000 units in April from 763,000 in March. Although demand for new homes may remain strong due to limited housing supply, rising mortgage rates and appreciating home prices are beginning to slow the real estate market.

Monetary Policy Federal Reserve Chairman Jay Powell delivers a welcome speech to the National Center for American Indian Enterprise Development. The speech comes a day after the president of the European Central Bank indicated that interest rates in the euro zone would rise in July.

2022 European Commission President Ursula von der Leyen and NATO Secretary General Jens Stoltenberg are both delivering speeches on global cooperation today. In Washington, the Chamber of Digital Commerce will host a blockchain summit. Speakers include Hester Peirce, Commissioner of the Securities and Exchange Commission, and US Senators Cory Booker, Kirsten Gillibrand and Steve Daines.

To remember George Floyd Today marks the second anniversary of the murder of George Floyd. His killing by a police officer sparked protests around the world and drew attention to racial disparities in the United States.

What else we read

The booming US labor market Georgia is emblematic of the broader American labor market. Its unemployment rate is at an all-time high and there are 2.4 job openings per unemployed person, well above the national average of 1.9. The conditions create “a labor market” that replicates across the country. This is the first in a three-part series on the tight U.S. labor market and what it means for workers, businesses, and policymakers.

South Korea v Crypto Leader “Lunatic” Do Kwon, the brash 30-year-old man behind terraUSD, is now “South Korea’s most hated man” after the stablecoin collapsed. Kwon’s high-profile backers, global marketing strategy and killer social media personality have helped attract attention and retail investors. But now many savers have lost everything.

  • Go further: The Money Clinic podcast interviews an investor who watched in horror as his $7,000 crypto holdings in luna and terra collapsed.

The war in Ukraine casts a shadow over Davos Once the playground of financiers and business leaders, the World Economic Forum has been fundamentally changed by the war in Ukraine, writes Gideon Rachman. Today, politicians and generals are regaining power and businessmen, who for decades believed that the world was a potential market, are confused.

‘Exxon of the past is dead’ after upheaval A year ago, the No. 1 activist hedge fund engine’s long-running victory — winning three seats on the conservative supermajor’s board — rocked ExxonMobil and Big Oil. Goals to net zero emissions from operations by 2050, spending limits on fossil fuel projects and a new low-carbon company are all signs of change.

Monkeypox: what you need to know about the virus Discovered in laboratory monkeys in 1958 and in a human 12 years later, monkeypox usually emerges from close contact with animals in sub-Saharan Africa. Nearly 100 cases have now been recorded in at least a dozen countries, the largest outbreak of the virus outside sub-Saharan Africa.

Graph showing the extent of monkeypox outbreaks

FT Globetrotter

The Financial Times’ insider guides to big cities travel to Singapore and visit the top five spots for brunch, from a former British army barracks to key spots for plane and superyacht spotters.

The striking facade of the Red House in Singapore’s heritage-rich Katong district © Benjamin Chia

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