Looser requirements for the proposed EU Ecolabel for Retail Financial Products would potentially increase green finance volumes channelled through eligible funds, a recent Esma analysis said.
Currently, the ecolabel is a voluntary scheme that demands compliance with six main criteria.
ESMA tested the first three quantitative thresholds of the criteria, discovering that only 16 funds out of a sample of 3,000 with €1 trillion assets under management met the proposed minimum portfolio greenness threshold and exclusion requirements.
In all three criteria, including investments in environmentally sustainable economic activities, exclusion based on environmental aspects and exclusion based on social factors, most funds failed to meet the requirements.
In all three criteria for the proposed ecolabel, namely investments in environmentally sustainable economic activities, exclusion based on environmental aspects, and exclusion based on social factors, most funds fell short of meeting the requirements.
The study highlighted that a higher offering of ecolabel products could result from interactions between different ecolabel requirements.
ESMA stated that looser requirements could attract a large number of investors and financing volumes as long as such actions do not harm the ecolabel’s credibility.
Read the full article here
© 2023 funds europe
