During a forum organised by Better Finance, the European federation of investors and financial services users, on Wednesday, 14 December, experts discussing sustainable finance concluded that the harmonisation of information still has a long way to go.
On one hand, the Sustainable Finance Disclosure Regulation (SFDR) actually still needs to be clarified, since it depends on the taxonomy. On the other hand, the European Financial Reporting Advisory Group (EFRAG) is in the process of setting sustainability reporting standards that are in compliance with the Corporate Sustainability Reporting Directive (CSRD) (see EUROPE 13069/25).
Bryan Coughlan, the sustainable finance officer at BEUC, believes that there are different investment cultures within European countries. In addition, financial experts have to contend with trust issues on the part of investors and consumers. “They have to make a commitment but won’t know the results for years”, he emphasised. The important thing, in his opinion, is to “establish [a] more reliable and trustworthy system”, since “you cannot build trust on marketing”.
Lenny Kessler, the portfolio manager at WHYO, insisted, for his part, on the need to integrate retail investors into the financial markets and to educate them.
All the panellists pointed out the lack of criteria for defining sustainability in Articles 8 and 9 of the SFDR, which creates a situation where this regulation is used as a label for financial product providers. European Commissioner for Financial Services Mairead McGuinness had herself raised the issue during a debate in the European Parliament (see EUROPE 13077/18).
Patrik Karlsson, a senior policy officer on the Investment Management Team at the European Securities and Markets Authority (ESMA), stated by way of reminder that the SFDR only defines transparency criteria—not sustainability standards. This text is directly linked to the taxonomy, which properly defines these standards but which has not yet been finalised. Meanwhile, at ESMA’s request, the European Commission will provide a first set of questions and answers to clarify specific issues within the next few months.
In the meantime, without a definition of ‘environmental impact’, the risk of greenwashing is high.
With regard to sustainability reporting standards, the experts have called for them to be harmonised with theInternational Sustainability Standards Board (ISSB), a standard-setting body, at the international level. “Fewer standards are better, more reliable”, felt Mr Coughlan, who also called for this to “not limit our ambitions”.
“The CSRD is the most important piece of the puzzle”, stressed Sven Gentner, head of the ‘Corporate Reporting, Audit and Credit Rating Agencies’ unit in the European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA). (Original version in French by Anne Damiani)