ESMA: Most funds do not meet ecolabel requirements

The proposed EU Ecolabel for Retail Financial Products could attract more green finance if requirements are loosened, according to an analysis by the European Securities and Markets Authority (ESMA). Currently, the voluntary ecolabel requires compliance with six main criteria, but testing by ESMA found that most funds failed to meet the proposed minimum portfolio greenness threshold and exclusion requirements. 

The proposed EU Ecolabel for Retail Financial Products could attract more green finance if requirements are loosened, according to an analysis by the European Securities and Markets Authority (ESMA).  

Currently, the voluntary ecolabel requires compliance with six main criteria, but testing by ESMA found that most funds failed to meet the proposed minimum portfolio greenness threshold and exclusion requirements. Looser requirements could lead to more ecolabel products and attract a larger number of investors and financing volumes, as long as the credibility of the ecolabel is not compromised, ESMA said. 

 The analysis also suggested that interactions between different ecolabel requirements could result in more products being offered. The EU ecolabel is part of the EU’s sustainable finance action plan, which aims to ensure capital flows towards sustainable investments. 

Read more: https://www.funds-europe.com/news/most-funds-do-not-meet-ecolabel-requirements-esma