Large investors must disclose environmental and social risks, EU rules
Investment managers who employ over 500 staff will have to disclose the social and environmental risks of all their financial products, the EU has ruled, a decision that should help shape a more sustainable European economy.
The EU Council and Parliament today reached an agreement on a Regulation on “disclosures relating to sustainable investments”, which is part of the European Commission's sustainable finance legislative package.
Julia Linares, sustainable investment officer at WWF European Policy Office, said:
"Thanks to this new EU law, consumers will be able to see what impact their investments could have on people and nature, and make informed decisions on where to put their money. This will lead to a cleaner, greener economy which is socially and environmentally more sustainable.
“It’s a shame that Member States watered down the Parliament’s proposals - notably by requiring only large investors to disclose- and we urge the requirement to be extended to all investors when it comes to be reviewed. Nonetheless, this is another great step forward, following hot on the heels of the climate disclosure requirement agreed for index providers last month.
“We now call on the EU Parliament to set the stage for a hat-trick by reaching a strong position on the “taxonomy” - a classification of how sustainable investments are - when they vote in the coming days. Doing so will provide even greater drive towards a truly sustainable European economy,” concluded Linares.
The agreed Regulation requires investment managers with over 500 employees to disclose:
- the financial impact of the environmental and social risks they face;
- the environmental and social impacts of their investments for all financial products they propose.
- In addition, any investment manager marketing a product as sustainable will have to justify such claims.
In February, the European Council and Parliament agreed that index providers must disclose how far their portfolio is aligned with the Paris Agreement on climate change, under the ‘Benchmark Regulation’.
MEPs are due to vote on the taxonomy proposal soon, possibly next Monday 11 March. It will then be finalised in trialogue after the EU elections in May. WWF is calling on MEPs to support the compromise proposal of the European Parliament's co-rapporteurs, Bas Eickhout MEP and Sirpa Pietikainen MEP. Their proposal would cover a wide range of economic activities and show on a scale how sustainable or not they are.
Sustainable Investment Officer, WWF European Policy Office
+32 484 21 49 61
Senior Communications Officer, WWF European Policy Office
+32 473 57 31 37