15 February 2019

EU Ecolabel for financial products questionnaire: EBF response

This questionnaire is designed to inform the development of EU Ecolabel criteria for financial products addressed to retail investors. The EU Ecolabel criteria will define the minimum environmental performance of this product group and will be based on the requirements of the EU Ecolabel Regulation 66/2010.

The EBF advocates for a gradual approach as to the scope as well as introduction of the social and governance aspects. The “ECO” label should focus on environmental issues first, while only key social aspects such as human and labour rights, subject to availability of reliable data, should be included as a minimal social safeguard.

As the social aspect develops in the taxonomy regulation, the scope of the ecolabel could be further enlarged. Development of a separate “sustainable label” that encompasses all aspects of the Environmental, Social and Governance criteria (ESG) could also be envisaged. Considerations could also be given to the development of labels with a different “degree of sustainability”, subject to operational feasibility and data availability.

The scope and the strategies to be reflected in the Ecolabel criteria would depend on its objectives. Investment funds addressed to retail clients and pension products should be included in the EU Ecolabel first. The EU green bonds as well as some other retail financial products such as life insurance could be targeted thereafter or subsequently. All strategies have their merits and use, depending on the objectives of the investment product. A combination of a minimum number of strategies could be envisaged.

The labels should add value to the product and act as a differential factor. The ambition should be that at least 5o % of investments are/be green. However, it may be difficult to have products that can qualify for the label in the initial phase, at least in some markets. Besides setting minimum thresholds, it is important to provide transparency to investors about the actual percentages used. Transparency and useful, understandable information to end-investors about eco-labelled products is as important as setting portfolio requirements. Consideration could be given to product-type specific thresholds.

Full response

© EBF