The French Ministry of the Economy and Finance has announced a series of changes to Socially Responsible Investments (SRIs), which are designed to facilitate sustainable investments. As part of these changes, almost 1,200 funds in France currently using the SRI label will be forced to exclude fossil fuels companies from their holdings. The updates to the SRIs was covered by ESG Today in a recent article which states:
“The update follows launch by Le Maire in 2021 of a committee aimed at reinforcing the ambition and requirements of the SRI label, which the Economy and Finance ministry said has not been significantly updated since 2016.
Based on the committee’s recommendations, the label will be updated with stricter requirements and climate impact as a key principle. Under the new rules, SRI-labelled funds will be required to exclude companies that exploit coal or unconventional hydrocarbons, as well as companies that launch new oil and gas exploration, production or refining projects.”
This is another move by financial regulators to bolster the quality of ESG investment products. Greenwashing in sustainability funds is something that the EU is currently struggling with as the Union eyes more regulations in this area. Part of the problem is that retail investors misunderstand fund labelling and ESG investment strategies. Often, ESG in fund labelling points to a fund’s exposure to ESG risks rather than ESG impact. Moves like this one seek to ensure that investment products are truer to what customers expect from sustainable funds.
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