The BSI (British Standards Institute) has published guidelines for fund managers designed to strengthen the integrity of sustainable investments and address the escalating issue of ‘greenwashing’ in the financial sector.

Sustainable investment funds – Design, implementation, monitoring and communication of sustainability attributes – Specification (PAS 7342:2025), sets out clear requirements for fund managers to design, manage, and communicate sustainable investment funds responsibly. The guidance aims to provide critical tools to ensure funds align with their stated objectives and maintain investor confidence.

Offering a clear framework for sustainable funds that aims to empower fund managers to demonstrate strong governance in investment selection, as well as their adherence to recognised good practice, the guidance should help enable a transparent and consistent approach. In December 2024, research found that 85 per cent of investors were identifying greenwashing about company sustainability performance as a greater problem than five years previously.

PAS 7342 builds on the foundation laid by PAS 7340 (on embedding the principles of sustainable finance in financial services organizations) and PAS 7341 (on responsible and sustainable investment management).

Complementing the Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements, the standard is consistent with regulatory frameworks and offers clear guidance in relation to sustainable investments.

Daan van der Wekken, head of sector – sustainability, BSI, said: “In the UK, amidst a proliferation of sustainable fund labels and various attempts to codify what constitutes good sustainable investing, this standard is designed to addresses the critical gap and provide the clarity and consistency needed to help fund managers navigate this complexity. This could be a key step in combating greenwashing in finance, accelerating progress towards a sustainable world by ensuring accountability in sustainable investments and helping investors make informed decisions."

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