Is the SFDR fuelling greenwashing?
This is at least one of the concerns of the Autorité des marchés financiers (AMF) – France, as this text does not set minimum requirements and essentially asks financial actors to publish information about their sustainability practices.
In order to allow for an assessment of the sustainability of financial products and provide a more consistent definition of « sustainable investment », the Authority developed a set of proposals to improve the current system:
- The European Commission should maintain the classification in articles 8 and 9 while introducing minimum criteria that a financial product should meet in order to be classified in one or the other category.
- The vague definition of a sustainable investment should be clarified to become more concrete and based on objective requirements.
- A minimum part of the underlying assets of article 9 products should consist of investments in activities aligned with the EU Taxonomy.
- Managers of article 8 and 9 products should be required to adopt a binding ESG approach in the investment decision-making process for the underlying assets of these products.
- Article 9 products should exclude investments in foil and gas activities that are not aligned with the European Taxonomy.
- Managers of article 8 and 9 products could be required to develop shareholder engagement policies and to publish information about them at the product level.
- Managers of article 8 and 9 products could be required to report on PAIs on their investment decisions regarding these specific products.
- A minimum part of the underlying assets of article 8 and 9 funds could consist of investments in assets « in transition ».
The definition of what asset can be considered « in transition » could rely either on the transition plans published by the issuers themselves as a CSRD requirement, or be defined in a future version of the Taxonomy as a level between « alignment » and « significant harm ».