LONDON (Reuters) – The European Commission proposed on Tuesday to modify the rules in force in the European Union (EU) on the definition of so-called sustainable investments in order to make the criteria simpler and more readable and to avoid practices of ” greenwashing.
This includes attaching the term “transition” to financial products claiming the “sustainable” label without yet being so and creating a “sustainability” indicator to rate investment funds.
“These simplifications consist of two voluntary categories of products, ‘sustainable’ and ‘transitional’, which financial market participants should use to ensure that individuals understand the direction of their products,” write in a joint press release European banking and insurance regulatory authorities.
Such a reform would notably allow investments in so-called “transition” assets that will become “sustainable”.
“The rules defining these categories should have a clear objective and criteria aimed at reducing the risks of greenwashing,” indicate the regulatory authorities.
The proposed changes would notably make it possible to reconsider the current classification based on articles 8 and 9 of the SFDR regulation, considered imprecise and likely to fuel “greenwashing” practices.
(Written by Huw Jones, Bertrand Boucey, edited by Blandine Hénault)
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