On Monday 5 November, the members of the committee on economic and monetary affairs (ECON) of the European Parliament approved by a large majority (42 votes to 2) the draft report by Paul Tang (S&D, Netherlands) on the proposed regulation clarifying how institutional investors should take environmental, social and governance factors (ESG) into account in their investment decisions (see EUROPE 11977).
“The financial sector should look beyond profits and consider the consequences for people and planet. We want the investments of banks, insurance companies and pension funds to be put in the service of a more just and sustainable society”, Tang said in a press release after the vote.
The text tightens up the information requirements on financial products and calls upon investors to show “due diligence” in their investment decisions.
Readers may recall that this concept was already included in the European Parliament's own-initiative report adopted at the end of May (see EUROPE 12029), which called for the creation of a general and compulsory due diligence framework including a duty of diligence to be phased in.
The text moreover defines “sustainability risks” as financial or non-financial risks, material or likely to be materialised, linked to environmental, social and governance risks and factors, where material for a particular investment approach.
It is worth noting that the rapporteur's proposal to include banks in the scope of application of the regulation was retained (see EUROPE 12088).
In a press release published on Tuesday 6 November, the organisation WWF welcomed the high level of ambition of the European Parliament in this vote and called for this to be sustained through the inter-institutional negotiations with the Council of the EU. (Original version in French by Marion Fontana)