How Can Asset Managers Navigate Greenwashing Risks? | EY Switzerland

Overview

Greenwashing—the practice of making misleading claims about the sustainability of products or investments—poses significant challenges for asset managers in today’s evolving regulatory and market landscape. With increasing demand for sustainable investment options, ensuring truthful and transparent communication is critical to maintaining investor trust and regulatory compliance.

Key Regulatory Frameworks

European Union: Sustainable Finance Disclosure Regulation (SFDR)

• The SFDR applies a tiered approach to sustainability labeling, using different “shades of green” to indicate varying levels of sustainability integration.
• Asset managers must understand and implement these distinctions correctly to avoid overstating ESG credentials.

Switzerland: AMAS Self-Regulation

• The Asset Management Association Switzerland (AMAS) defines a principle-based framework setting minimum standards for labeling investment products as sustainable.
• AMAS standards are evolving, with amendments anticipated, making it imperative for asset managers to stay current to ensure compliance.

Challenges in Avoiding Greenwashing

• Complexity of Standards: The ambiguity and continuous updates in sustainability regulations require asset managers to adopt flexible and adaptive compliance strategies.
• Transparency Requirements: Investors increasingly demand clear, verifiable data on how sustainability factors are integrated and measured.
• Third-party Certifications: Lack of recognized certifications or accessible data can lead to dubious claims and potential greenwashing accusations.

Best Practices for Asset Managers

1. Clear Definition of Sustainability Criteria: Establish transparent, measurable standards aligned with regulatory frameworks such as SFDR and AMAS.
2. Robust Due Diligence: Conduct thorough assessments of portfolio companies’ sustainability practices, ensuring claims are evidence-based.
3. Consistent Reporting and Disclosure: Provide investors with regular, clear disclosures explaining the extent and impact of sustainability integration.
4. Engage Independent Verification: Utilize third-party assurance and certifications to enhance credibility and reduce greenwashing risks.
5. Continuous Monitoring and Adaptation: Stay informed of regulatory changes and market expectations to adjust strategies proactively.

Conclusion

Navigating greenwashing risks requires asset managers to balance evolving regulations with investor expectations for authenticity and transparency. By implementing rigorous standards, leveraging independent certifications, and committing to transparent communication, asset managers can build trust and foster sustainable finance growth.

Source: EY Switzerland, Authors: Heidi Gysi & Kelly Ching, 09 October 2025
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