Financial Times reports that government treasuries and the European Union consider stricter evaluation parameters for companies.

Sacha Sadan, head of ESG at the UK's Financial Conduct Authority, said that "the whole investment chain has to get involved, and ratings have to be regulated too."

In order to prevent greenwashing, companies might have to provide proof when it comes to validating their statements.

He stated that the lack of clear ESG definitions caused confusion and trust issues among consumers and investors.

ESG investing has grown on a global level to some 3.5 trillion euros in 2021, since companies and consumers think that investments can be correlated with social and environmental actions.

However, the increase in ESG popularity meant that some companies exaggerated their claims with regards to these factors in order to attract more customers and capital.

To address the fact that some investors might get onto the ESG train just as a trend without doing the work that is required to make sure that the investments actually count, regulators will be stricter when it comes to evaluating things like ESG disclosures.

Sustainalytics, one of the biggest providers of ESG data, said that "we welcome well-calibrated rules that emphasize the transparency, integrity, and the independence of ESG ratings."

While industry members complained that regulators were not clear when it came to the standards, leaving them for interpretation, Sadan says that there are efforts to make official messages more coordinated and clearer.

"We’re trying to go from being seven voices to about one and a half voices. This will make investors’ life easier and our life more impactful", he said.