The regulators of the French and Dutch financial systems have called for increased regulation of ESG [environmental, social, and governance] data, ratings and related services, in part to stamp out ‘greenwashing’.
The Autorité des Marchés Financiers (AMF) and the Autoriteit Financiële Markten (AFM) proposed a regulatory framework, which they said would also prevent misallocation of investments and ensure investor protection.
Methodologies, conflicts of interest and enhanced dialogue with companies subject to sustainability ratings are among the regulators’ targets.
The framework could become one of the key measures of the European Commission’s renewed sustainable finance strategy, the watchdogs said.
Robert Ophèle, AMF chair, said: “The sustainable investment market is growing rapidly, but its credibility depends largely on the quality and reliability of the ESG information used.”
According to Laura van Geest, chair of the Netherlands’ AFM, the joint position paper aims to contribute to the debate on what ESG regulation in Europe should look like.
“We believe providers of sustainablity-related services play a crucial role for investors in the market for sustainable finance,” she said.
“Many investors depend on them in their investment decisions. Introducing minimum transparency and organisational requirements should greatly benefit this key part of the sustainable finance ecosystem.”
The two regulators also said the green transition in Europe will require “significant” investment over the coming years. The European Green Deal estimates that €260 billion needs to be mobilised annually by 2030 in order to achieve its sustainability goals.
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