With its Action Plan on Financing Sustainable Growth, the European Commission (EC) has set itself the ambitious goal of “reorienting capital flows towards sustainable investment”. Retail investors appear to be the perfect allies to achieve this goal, as their interest in social and environmental impact-oriented financial products has never been stronger than now. As demonstrated in surveys and academic research, a majority of retail investors are concerned about sustainability and want to leverage their power as shareholders and investors to generate positive change in the real economy.
The concurrent evolution of regulatory requirements at EU level, including the extension of the suitability assessment to ESG-related preferences, the integration of sustainability factors to the target market assessment of investment entities, and the introduction of sustainability-related disclosure requirements for financial institutions, appears to support this trend. The stated objective is to enable retail investors to find financial products matching their impact-related expectations and to support the emergence of such products on the mass market. In this context, the Ecolabel scheme is one of the first concrete tools that the EC plans to launch to help achieve this objective.