Labels for Sustainable Financial Products
Several national and regional labels for sustainable financial products already exist. For example, the Austrian Label for Sustainable Financial Products or the French Label for Socially Responsible Investment (see our overview on the existing ecolabels for financial products) However, these labels differ considerably in their interpretation of “green investments” or “sustainable investments” due to the application of different methodologies and taxonomies (with varying degrees of detail and diverse definitions).
According to the EU, the existing market-based approaches are inconsistent and expose investors to risks. In the Action Plan: Financing Sustainable Growth adopted in March 2018, the EU Commission proposed the creation of an EU Ecolabel for Financial Products (EU Ecolabel). It is a voluntary EU-wide labelling scheme that would be established by extending the EU Ecolabel Regulation 66/2010 to financial products. This labelling scheme will be applied to select financial products once the Regulation on the Establishment of a Framework to Facilitate Sustainable Investment (Sustainability Taxonomy) is adopted.
The EU Ecolabel could promote the comparability of investments, facilitate and enhance green investment, and support a stable and sustainable financial market at the European level, and beyond. It could especially allow retail investors concerned with the environmental impact of their investments to rely on a trusted and credible (third-party verified) label when investing in green financial products as well as help to discourage “greenwashing”.
For a complete overview of Policy Outlook initiatives on labels and product information, please check the Policy Outlook tool.