European policymakers have been watching the boom in sustainable investing, saying they want rules to thwart asset managers that overplay their sustainable credentials to win hefty environmental, social and governance inflows.

The ESG trend has been turbocharged by the Covid pandemic — helping ESG initiatives spread so far and so fast that some worry that funds can adopt the term as they please. The incentives to ‘greenwash’ are enormous. PwC predicted that in Europe alone, ESG assets could account for more than half of total European mutual fund assets by 2025, skyrocketing to as much as €7.6tn.