Sustainability

Since August 2022, fund distributors have been identifying their clients' sustainability preferences to suggest suitable products. For this purpose, fund providers have adapted their ESG strategies to the EU requirements. However, gaps in regulation are still complicating the implementation of the required sustainable product features. Above that, there are not yet enough products available to meet all customer preferences.

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The EU is aiming for a climate neutral economy by 2050 and wants to support sustainable economic sectors and production processes by directing capital flows into corresponding activities. As an important financial intermediary, the fund industry is happy to play a key role in this endeavour. Asset managers have a longstanding track record of financing sustainable projects and companies. As early as 2012, the BVI introduced its "Guidelines for Responsible Investment”. However, the EU legislator has not yet laid down any generally applicable definition of what is sustainable.

Since August 2022, investment advisors must ask their clients about their sustainability preferences and offer suitable products, whilst funds with sustainability features (according to Articles 8 and 9 of the SFDR) must comply with new mandatory product characteristics. However, details and harmonised standards are still lacking. Therefore, the BVI and the German Banking Industry and Derivatives Associations have developed a joint target market concept for sustainable financial products. The concept provides a reliable minimum standard for the German market which is by date unique in Europe.

Nevertheless, there is much room for interpretation remaining, as clear regulatory guidelines do not exist. Among others, determining the minimum share of sustainable and taxonomy-aligned investments at fund level proves to be difficult, due to a lack of binding and consistent calculation methods. This may result in products pursuing a similar investment strategy whilst reporting significantly different shares of sustainable investments.

The BVI is calling for minimum standards to cover not only the requirements for sustainable financial products, but also for global ESG data and corporate reporting. However, a sense of proportion will be key: If the regulatory bar will be set too high, financing will be restricted to the green niche rather than supporting the necessary transformation of the economy.

In addition to a lack of standards, inconsistencies in the legislative timetable are causing problems for the fund industry. For example, funds with sustainability features already have to provide information on the share of taxonomy-aligned investments, although the required company data will not be available until 2023, and even then, gradually and from EU companies only. Not surprisingly, most funds under Articles 8 and 9 of the SFDR will report very low taxonomy-aligned investment shares, even down to zero percent.

At the end of September 2022, fund companies in Germany managed a total of 717 billion euro in retail funds and Spezialfonds with sustainability features.

News

Sustainability

16/1/2023

Standardisation is crucial

The BVI welcomes the efforts of the ESAs to tackle greenwashing. However, standardisation is the best approach.

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Sustainability

17/11/2022

Snapshot Sustainability

Assets of funds with sustainability features have increased by seven percent since the beginning of the year despite market slump.

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Sustainability

18/5/2022

Snapshot Sustainability

Uncertainty on financial markets caused by the war in Ukraine has hardly affected retail funds with sustainability features so far. At the end of...

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Positions

Sustainability

13/1/2023

Sustainability

BVI’s position on ESAs Call for evidence on better understanding greenwashing

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Sustainability

13/1/2023

Sustainability

Key messages by BVI in the context of the ESAs’ call for evidence on better understanding greenwashing

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Sustainability

8/8/2022

Sustainability

BVI’s key messages in the context of EFRAG Sustainability Reporting Board Consultation Survey

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Sustainability

2/8/2022

IFD/IFR/WpIG, Sustainability

BVI position paper on EBA’s discussion paper on the role of environmental risks in the prudential framework

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Sustainability

2/8/2022

Sustainability

Umsetzung der Nachhaltigkeitspräferenzen bei Investmentfonds: aktuelle Herausforderungen und Erkenntnisse

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Sustainability

29/6/2022

Sustainability

BVI position on the consultative report of the Financial Stability Board (FSB): Supervisory and Regulatory Approaches to Climate-related Risks

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Sustainability

9/6/2022

Sustainability, Rating Regulation

BVI position paper on the European Commission’s “Targeted consultation on the functioning of the ESG ratings market in the European Union and on the consideration of ESG factors in credit ratings”

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Sustainability

8/6/2022

KAGB, Sustainability

BVI-Position zum Referentenentwurf der Bundesanstalt für Finanzdienstleistungsaufsicht über eine Verordnung zur Änderung der Kapitalanlage-Verhaltens- und Organisationsverordnung

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Sustainability

13/5/2022

Insurance Distribution Directive (IDD) / Sustainability

BVI’s reply to the Consultation Paper on EIOPA Draft Guidelines on the integration of the customer's sustainability preferences in the suitability assessment under the Insurance Distribution Directive (2016/97)

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BVI's positions from A-Z

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