Asset managers are expected to face “extreme challenges” and a substantial increase in compliance costs when adapting to strict new rules that are designed to curb investment funds from exaggerating their sustainable investment credentials.

From 10 March, fund management groups selling sustainable investment products to investors across Europe will have to adhere to the bloc’s Sustainable Finance Disclosure Regulation — a set of rules which impose strict disclosures and a requirement for investment groups to categorise funds based on their ESG credentials.