BEUC’s views of ESMA’s proposal for name-related requirements for investment funds
Why it matters to consumers
Consumers who want to buy investment funds that do not harm the planet or people are often misled about the sustainability content of the funds on offer. The European Securities and Markets Authority (ESMA) has now proposed minimum sustainability requirements for funds that contain words like 'green', 'sustainable', 'ESG' etc. in their names because the name is often the first feature of a fund that potential retail investors notice and because names can, and often do, contain misleading promises. Narrowing the gap between an investment fund's sustainability promise and the reality of its contents is a welcome improvement, but it will not solve the underlying problems in the sustainable investment industry that create the conditions for greenwashing.
Summary
We agree with the need for measures to fight greenwashing in retail investment products and welcome the chance to comment on ESMA's proposals.
• Well-designed and properly enforced supervisory guidelines are a welcome stopgap measure, especially if several such measures are combined. However, they are no substitute for a reform of the regulatory framework for sustainable investment products, especially the Sustainability-Related Financial Disclosures Regulation, which should be turned into or supplemented by a proper product standard.
• We support minimum content thresholds for sustainable funds, but not the distinction between funds that carry words like 'sustainable' in their names and others that 'merely' use ESG-related terms. The same rules should apply to all sustainable/ESG/Green investment funds.
• We support the use of exclusion lists, but we suggest using a more far-reaching one than the one that ESMA proposes.
• So-called impact funds should be subject to rules that take their specificities into account. Fund managers should at least have to explain how they intend to achieve and measure impact.
• There should also be special rules for so-called transition funds. They should have to describe how they intend to improve the sustainability performance of investee companies and how they keep track of improvements (or the lack thereof)...
more at BEUC
© BEUC
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article