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March 27, 2020

Sustainable Finance & Consumer Protection Webinar: Overview & key takeaways

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Prior to the European Commission’s stakeholder meeting on the Ecolabel for Financial Products on 25th March, 2° Investing Initiative and BETTER FINANCE hosted a webinar to discuss critical sustainable finance and consumer protection issues.

Panellists discussed issues including retail funds’ misleading marketing claims; challenges associated with environmental impact measurement; consumers’ sustainable investment preferences; shareholder voting rights; and European policy responses. In total, 125 participants took part in the webinar.

Among the key takeaways, 2DII’s research findings show that the majority of consumers wish to invest sustainably, and 40% want to have a measurable environmental impact in the real economy. However, 2DII’s legal analysis found that 99% of retail funds’ environmental impact claims examined were misaligned with regulatory guidance. Crucially, the most recent version of the EU Ecolabel for Financial Products criteria is likely to increase the risk of greenwashing associated with these environmental impact claims.

2DII launched four research publications on these topics during the webinar:

  1. A Large Majority of Retail Clients Want to Invest Sustainably: Survey of French and German retail investors’ sustainability objectives
  2. EU Retail Funds’ Environmental Impact Claims Do Not Comply with Regulatory Guidance: Analysis of a sample of 230 funds against the criteria of the EU Multi-Stakeholder Dialogue on Environmental Claims
  3. The draft criteria of the Ecolabel on financial products and the second technical report are still misaligned with the requirements of the Ecolabel Regulation: Feedback on the second version of the Ecolabel criteria for financial products
  4. Retail Clients Want to Vote for Paris: Analysis of retail clients’ preferences regarding the use of shareholder rights on climate resolutions

Below is the full agenda of the webinar where these research outputs were discussed, together with links to relevant recordings and presentations where available.

I. Compliance of environmental impact claims

This session summarised 2DII’s analysis of marketing claims of a sample of 230 retail funds. 2DII found that 52% of the funds made “impact” claims as defined by the academic literature – 99% of which do not comply with regulatory guidance, including the EU Multi-Stakeholder Dialogue on Environmental Claims associated with the Unfair Commercial Practices Directive.

  • Misleading marketing claims – Pablo Felmer Roa & Stan Dupré (2DII)
  • Q&A
II. Consumer expectations

This session provided an overview of consumers’ sustainable investing preferences and expectations. It included a presentation on “Sustainable Value for Money,” a BETTER FINANCE and CFA Institute research project; 2DII’s results from surveys of 2,000 French and German consumers on their sustainable investing objectives; and an overview by Dr. Rob Bauer of behavioural finance implications, including his latest paper, “Get Real! Individuals Prefer More Sustainable Investments.” Research discussed in this session indicates that most consumers wish to invest sustainably, even if it comes at a cost, but are confused about the best way to do so.

  • Policy context – Edoardo Carlucci (BETTER FINANCE)
  • Consumer surveys – Stan Dupré (2DII) & Dr. Bo van Grinsven (Behavioural Insights Company)
  • Behavioural finance perspective – Dr. Rob Bauer (Maastricht University)
  • Q&A
III. Environmental impact measurement: focus on engagement

This session covered the latest research on ways to measure the impact of various investment strategies. It included an overview by Sebastian Godinot (WWF) of relevant EU policy developments, including the Ecolabel for Financial Products and Green Bond Standard; Dr. Julian Kolbel’s research on measurement of investor impact and company impact; a case study by Will Pomroy of Hermes Asset Management in relation to the only fund that 2DII found was aligned with regulatory guidance on marketing claims; and 2DII’s paper on climate shareholder resolutions and retail investor voting preferences.

  • Policy context – Sebastien Godinot (WWF EU Policy Office)
  • Measurement – Dr. Julian Kolbel (University of Zurich)
  • Hermes case study – Will Pomroy (Hermes Asset Management)
  • Vote for Paris / Shareholder resolutions paper – David Cooke (2DII)
  • Q&A
IV. EU Ecolabel for Financial Products

This last session featured a presentation by Julian McLachlan (DG ENV) of the EU Action Plan on Sustainable Finance, Taxonomy, and Ecolabel on Financial Products. 2DII concluded with an overview of its response to the latest draft criteria of the Ecolabel on Financial Products and Second Technical Report, which we believe are likely to increase chances of greenwashing and do not align with relevant legislation.

  • Ecolabel intro – Julian McLachlan (European Commission)
  • Ecolabel note presentation – Stan Dupré, Pablo Felmer Roa (2DII)
  • Q&A

 

 

This project has received funding from the European Union’s Life programme under grant agreement no. LIFE18 IPC/FR/000010 – AFFAP.

The webinar contents reflect only the presenters’ views and the Commission are not responsible for any use that may be made of the information it contains.

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