“Do you want green or social investments?” Asking savers about sustainable investments will be mandatory in the EU from Tuesday, but taking the answers into account will be a headache for banks. “Is sustainability an important investment objective for you”? From now on, customers who wish to invest part of their savings in financial products of La Banque Postale will have to answer this question, as was already the case with regard to the degree of risk taking. If the answer is negative, the questions go no further.
And if it is positive, a second question will ask if the client wants to define their preferences themselves or leave the task to their advisor. If he stays with the hand, the client will have to give a proportion, with a number or a degree of intensity to which his advisor must adhere. The mission seems simple, but the financial sector feels ill-equipped on the eve of these new requirements imposed by European regulations.
The criteria are not yet clear
“We put the cart before the horse,” BNP Paribas AM head of public affairs Laurence Caron-Habib summed up during a presentation in early July. In fact, the new questionnaire is being implemented despite the fact that the criteria to define what exactly is a sustainable investment are not yet fully known.
Although the criteria for two of the six environmental objectives (climate change mitigation and adaptation) have been defined by Brussels as part of its green taxonomy, four remain to be specified on water, pollution, circular economy and biodiversity. They are not expected until the fall. And the obligation to publish environmental data for companies does not start until January 2023.
Another danger mentioned by the European association of asset managers in response to a query from the European Securities and Markets Authority: “It will be common that no sustainable financing product fully corresponds to the initial preferences of the client.” Less than 2% of investments in CAC 40 companies would be in line with the taxonomy, according to BNP Paribas AM.
If they do not want to refer to the Brussels green classification, fund distributors, which are offered to savers, can refer to the notion of “sustainable investment”. But the definition, which is vaguer, raises fears of different interpretations according to investment fund managers, with the ghost of false green promises behind it.
Source: BFM TV
