“Do you want to invest in sustainable products? » or “Take into account the negative impacts of your investments on the environment? ». And if so, which ones? Until what point ? From August 2, individuals will be asked these questions by their bank adviser, when they want to make an investment.
European premiere
This new rule is due to the European Union. Establishments that market financial products must now offer their clients a questionnaire on their preferences in terms of sustainable investment, just as they did until now with regard to risk taking. « The purpose of this questionnaire is above all educationalexplains François Roux, Head of Product Strategy & Development at BNP Paribas Asset Management. LAdvisors will have to be trained to turn this into a conversation, while respecting the regulations of the regulator”. The measure is part of a series of texts being prepared at European level to direct more capital towards activities in line with the ecological transition.
For players in the sector, it’s a small revolution. “This is the first time that the rules on product advice products are harmonized at European levelexplains Léonard Pirollet, in charge of public affairs missions at La Banque Postale Asset Management. Until now, the fact of offering sustainable products or not remained at the discretion of the establishments”. From now on, everyone will have to raise the issue with their customers..
« Label vert »
Banks will have to rely on classifications established by the European Union, including the “green taxonomy”, a kind of label established at Community level which makes it possible to distinguish sustainable activities from those which are not. The inclusion of fossil gas and nuclear power had been the subject of a political showdown in recent months, won by supporters of these energies. They were finally considered as activities ” of transition “under certain conditions, by taxonomy.
However, the regulations provide that savers will be informed of the share represented by these “transition” activities in the investment portfolio. They may also choose not to invest in activities that have negative impacts on water or biodiversity, for example. “Regulation will help generate interest in sustainable investmentsgreets Léonard Pirollet. On the other hand, the level of complexity is such that we almost end up with tailor-made placements”.
Insufficient supply
Change is turning into a headache for asset management players. Because if the regulations come into force on August 2, only provisional guidelines have been made public by the European Securities and Markets Authority (ESMA) at the end of May. The full rules won’t be released until September.
Not to mention that the list of products that can be considered sustainable by the European Union has not been fully recorded. The regulations for financial products will not come into force until January 1, 2023. Another obstacle: certain information is not available. The extra-financial reporting obligation for companies, supposed to make the impact of companies on the environment transparent, will only come into force from 2024.
The association of European asset managers (Efama) points to a risk: “In the early stages, it will be common that no sustainable finance product fully matches the preferences initially expressed by the customer”simply because the supply of products that can be considered sustainable will be insufficient.
The alternative to the SRI label
In the eyes of François Roux, however, there are solutions: « The investor will always be able to turn to already existing and more successful references, such as the SRI Label »created by the French Ministry of the Economy.
Léonard Pirollet, of La Banque Postale regrets the early implementation of the regulations: “We will have to be vigilant about the way banking establishments apply the sustainability criteria because, as they stand, the texts leave them room for interpretation”.