Fund giant BlackRock is warning regulators that the SEC's new proposed rules to fight greenwashing by fund managers could create more confusion and lead investors to think their holdings are more socially conscious than they are. Specifically, the firm is concerned over a key detail in the proposal that would require managers to say how ESG issues fit into strategies that also consider other factors. It sent a letter to the SEC arguing that the detail could mislead investors about how much environmental, social, and governance issues factors into stock and bond decisions. The SEC had proposed new regulations for ESG funds in May, which are expected to be finalized in the coming months. BlackRock’s argument has been echoed by industry trade groups such as the Investment Company Institute and the Managed Funds Association. However, these arguments are unlikely to stop the SEC’s crackdown on ESG labels.

Finsum:Blackrock sent a letter to the SEC warning that the new proposed rules on ESG labels will only muddy the waters.