Europe’s Anti-Greenwashing Rules Take Effect for Fund Managers

European efforts to define which investments are green and which aren’t received a boost Wednesday when new rules requiring fund managers to evaluate and disclose the environmental, social and corporate governance features of financial products took effect.

The Sustainable Finance Disclosure Regulation, or SFDR, covers all European Union financial-market participants and advisers, as well as foreigners that market products to EU investors, and requires them to start collecting and reporting certain ESG data. The rules demand disclosures on how sustainability risks affect investor returns and, conversely, how investments negatively impact sustainability factors such as climate change.