Japan’s financial regulator says it suspects "more than a few cases” of greenwashing by asset managers running portfolios related to environmental, social and governance (ESG) issues and will take "regulatory action against malicious cases,” Hideki Takada, director at the Financial Services Agency, said in an interview.

After a review was sparked in part by the $9 billion (¥1.18 trillion) Mizuho Financial fund that failed to offer investors enough information about its environmental impact, the FSA has set new limits on which funds can label themselves "ESG.”

The new rules address "grave concerns” about mislabeling by some financial services firms that are pitching funds focused on ESG issues, Takada said.