Itwo months ago, a major blow was dealt to the credibility of the financial investment industry. Journalistic investigative platforms Investico And Follow the Money published, on November 29, 2022, their “ Great Green Investment Investigation », relayed by many international media.
According to this large-scale survey, half of European “dark green” funds – i.e. funds which comply with Article 9 of the European regulation on the publication of information in sustainability in the financial services sector (Sustainable Finance Disclosure Regulation/SFDR, November 27, 2019) – continue to invest in coal, gas or air transport. At least 8 billion euros labeled “sustainable investment” are thus dumped on polluting industries.
How is it possible ? The lack of clarity of the SFDR regulations and the margin of interpretation are often invoked. We believe, on the contrary, that the regulations are perfectly clear concerning investments in fossil fuels which do not fall within the scope of Article 9. Even if the legislation were to lack clarity, one would expect no less from the financial sector that it respects not only the letter but also the spirit of the law.
A tiny part of the market
The stone thrown into the pond by this investigation is therefore salutary. As an investor, you must be able to make an informed decision based on the reliability of the information provided. Only then does the SFDR have a chance of achieving its goal of directing more capital to sustainable initiatives and combating greenwashing.
Eight billion euros is a lot of money. Yet this is only a tiny part of the market. The vast majority of investments continue to be placed in funds that do not have the slightest ambition in terms of sustainability. Let’s call them, for convenience, “dirty” funds.
This is a flaw in the system. Why is legislation and regulation necessary to establish the degree of sustainability of a fund, when only limited legal measures and constraints are provided to inform investors of the damage caused to human beings, the Earth and the environment by thousands of other funds?
An easy-to-fix bug
It goes without saying that green products should not be sold in a misleading way, but it is even more important to make it known that ordinary investment products generally contribute, and in a very “effective” way, to the destruction of humanity. Just as the warnings on cigarette packets and the Nutri-score on food packaging contribute to healthier consumption, the real nature of our investments should be readable.
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