On 31 August 2022, the International Organization of Securities Commissions (IOSCO) published a final report on retail investor education in the context of sustainable finance markets and products. The final report has been prepared by IOSCO’s Committee on Retail Investors which was mandated to identify developments in investor education with regard to sustainable finance, and to advance investors’ knowledge of the characteristics and risks associated with ESG products.
The final report identifies some of the main challenges and sound practices for providing investor education on sustainable finance for retail investors. The final report also includes a collection of examples of investor education materials and tools for possible reference or use by IOSCO members, consistent with their jurisdictions’ laws and regulations, as well as examples of relevant experiences.
The final report concludes that currently regulators are still learning about the most effective ways to educate retail investors about the complexities involved in sustainable investing. In this regard regulators are encouraged to consider the final report as they work on financial education in relation to sustainable finance and the accomplishment of three objectives:
- Raising awareness – not all retail investors are aware of the availability of different ESG products.
- Enhancing understanding – regulators should help retail investors understand what sustainable investments are, where to find basic information on ESG products, what to expect from an ESG product, and how to mitigate the risk of greenwashing.
- Translating awareness and understanding into informed decision-making – financial education could support better financial decisions by helping retail investors identify opportunities and mitigate risks.