In a plenary debate on the investment practices of sustainable investment funds, MEPs asked the European Commission, on Thursday 19 January, to clarify the Sustainable Finance Disclosure Regulation (SFDR).
The debate comes after a survey by 11 leading European media outlets revealed that almost half of Europe’s most sustainable funds invest in fossil fuels and other highly polluting activities.
“The Commission went where no regulator went before, to end short-termism in the financial markets”, acknowledged Paul Tang (S&D, Dutch). “This is a daunting task, but the Commission has taken it on and done it firmly by creating disclosure for asset managers”, he praised.
“If you’re the first at something, it’s normal that things don’t go as planned”, he continued. He therefore urged the Commission to put things right to avoid greenwashing in the sustainable finance sector.
In particular, he called for transparency in the entire green bond market (see EUROPE 13085/10). He urged the Commission to use “the tools already on the table”, such as the taxonomy, to address this issue.
For his part, Seán Kelly (EPP, Irish) called on the Commission to look into this issue quickly, in order to obtain clarification on the SFDR, in particular Article 9, which allows investors to label their products as ‘sustainable’ without defined criteria (see EUROPE 13084/16). “There should be no grey areas”, he said.
The European Commissioner for Transport, Adina-Ioana Vălean, provided some answers. “We expect the implementing measures that came into force on 1 January to significantly increase industry self-correction and help facilitate supervision”, she said.
As the implementing measures specify the exact content, methodology and presentation of the information to be disclosed by product manufacturers and distributors, she considered that “it will become increasingly difficult for financial intermediaries to make unfunded grim claims or to hide that they invest in potentially harmful activities”.
She recalled that the Commissioner for Financial Services, Mairead McGuinness, has announced the launch of a full evaluation of the implementation of the SFDR in 2023 (see EUROPE 13077/18).
Furthermore, she explained that the introduction of minimum mining criteria for the so-called ‘light green’ and ‘dark green’ funds is one of the options that the Commission wants to assess once the interinstitutional negotiations have started, as the current rules do not foresee such a mechanism. (Original version in French by Anne Damiani)