He greenwashing It gets harder and harder each time. This is what we call ecopostureo either greenwashingthat is, to the fact that companies boast of being sustainable without being so. The year 2024 will be crucial to combat it. On the Old Continent, more and more regulations are being put in place to ban this practice which has often unfairly penalized green products and sustainable investment funds. On the one hand, last March, the Official Journal of the European Union published the Green Claims Directive, directive on green claims or slogans used by companies (the European Council approved it in February).
In Spain, the Ministry of Consumer Affairs is in the process of transposing the law into what will be the Sustainable Consumption Law, which provides for penalties of up to 100,000 euros. On the other hand, The European Parliament approved the Due Diligence Directive or CSDDD, which will impose fines on companies that violate human rights and the environment throughout their value chain. In 2025, transparency will increase significantly, as we will see the first CSRD-compliant sustainability reports (Corporate Sustainability Reporting Directive, Directive on corporate reporting on sustainable development). The new European reporting standards on extra-financial issues will affect more than 2,000 companies in Spain and almost 50,000 across the European Union.
These CSRD data, the disclosure of which will soon be compulsory – in principle reserved for the largest companies, and which will gradually broaden their scope of application – are worth gold to investment fund managers, who need all this information to be able to build portfolios. truly green for their customers.
Asset management challenges
Over the past four years, the asset management industry has faced a regulatory earthquake when it comes to sustainability. They have adapted with effort to regulations that have been extremely criticized for their requirements and their timetable. One of the obstacles that managers have faced concerns precisely the data that will finally reach them thanks to the application of CSRD. It’s been a year since the Big Bang of sustainable funds.
For years, managers have been required to label their sustainable investment funds as such, but to do so they needed to have information on the sustainability of their holdings; However, they were not yet required to report them. This will change soon.
Pay attention to fund names
Continuing in the world of investment funds, since November 21, all new vehicles launched in the EU will have to apply the new guidelines from Esma (the European Securities and Markets Authority) on sustainable denominations. The watchdog is aimed at short-term funds that want to include words like Sustainable, Green… or acronyms like ESG (which refers to environmental, social and good governance criteria) in their name. He will tell them what (and how much) they should invest in, and he has vetoed certain businesses, like oil companies. The aim is to avoid that the portfolios of these products are not really green, and that their name ends up functioning as a simple claim. marquetinian.
What do these new demands consist of? Funds whose names include terms such as Sustainability, Impact, ESGeither Environmental They will have to exclude companies that derive 10% or more of their revenue from oil exploration, refining or distribution; They will also not be able to invest in companies that extract coal. In addition, they will have to exclude companies whose 50% of their billing depends on gas, and those utilities which produce electricity above a certain level of emissions.
These guidelines affect about 10% of European Union funds, according to calculations by Sustainable Fitch (the sustainability division of the Fitch ratings agency), which estimates that some 6,500 European funds include words like those mentioned in their name. There are around fifty Spaniards, plus all their classes. The CNMV (National Securities Market Commission) has already confirmed that it will apply these indications, which will increase “harmonization at European level and investor protection”, as the regulator noted in a press release.
