• Deborah

Published on August 22, the Final Report on Retail Investor Education in the Context of Sustainable Finance Markets and Products (the Final Report) outlines the lack of consistent and comparable information on ESG products, the knowledge gaps combined with low levels of financial literacy that could expose retail investors to different risks of potential misconduct such as greenwashing.


More specifically, some of the issues and challenges identified, as well as the corresponding suggested approached to tackle the latter, include:

  • Lack of consistent and comparable information. Investors, market participants and regulators need full, accurate, timely and comparable information to understand and manage risks, define investment strategies, get adequate prices and valuations, determine expected returns, and compare investment alternatives.

Suggested approaches for regulators

1/Include practical guidance on sustainability and other ESG-related reporting requirements in their financial and investor education programs.


2/Orient retail investors on how to obtain sustainability related information in the investment chain.

  • Knowledge gaps. Such gaps impede investors' ability to evaluate ESG financial products, and ultimately negatively impact their protection.

Suggested approaches for regulators

1/Promote actions to enhance and assess retail investors’ understanding of sustainable products, e.g., by conducting surveys or questionnaires.


2/Reinforce financial education for retail investors to enhance retail investors’ understanding and awareness of sustainable finance, its features and risks.


3/Clarification of ESG terminology.


4/Custom communications approaches and channels tailored to various retail investors’ profiles and preferences.

  • Perceptions of performance and risks when comparing ESG products, as well as comparing sustainable products and conventional investment products.

Suggested approaches for regulators

1/Conduct studies to map the market of sustainable investing products offered to retail investors and their main features, risks, and barriers.


2/Investor education initiatives focus on clarifying ESG-product characteristics, thereby highlighting risks and financial performance perspectives.


3/Investor education programs enabling retail investors to compare and analyze the difference between ESG products and other investments.

  • Level of awareness on greenwashing risk. Unsubstantiated or misleading claims about the sustainability characteristics of a product, service or company raise investor protection concerns.

Suggested approaches for regulators:

1/Include in their retail investor education programs a component on raising awareness of the importance of assessing relevant parts of investment products’ materials in which sustainability information might be found and analyzed (e.g., prospectus, policy strategy, use of proceeds).


2/Assist retail investors in identifying the main sustainability-related issues to be assessed and understand whether their preferences and expectations match with the ESG product in which they may want to invest.


3/ Support market participant’s initiatives to help retail investors identify the use of ESG certifications, labels, and scores in the financial products offered.



The Report also presents some tools that securities regulators should consider when (i)developing educational content about sustainable investments; (ii) using a variety of communication channels to inform investors about the features and risks of sustainable investments, and (iii) fostering educational activities dedicated to other targets.


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