Written by Hugh Jones
LONDON (Reuters) – The European Union will not introduce a short-term labeling system to combat misleading sustainability claims made by investment funds to attract money, Irish Central Bank Deputy Governor Dervil Rowland said.
Earlier this week, the United Kingdom, which is no longer a member of the European Union, created a new fund rating system to curb “greenwashing,” or unsubstantiated claims about sustainability.
Rolland said the European Commission, the EU’s executive body, could further explore a labeling system for investment products in due course.
The European Union securities watchdog, of which Rolland sits on the board, said last month that the lack of uniform labeling could lead to confusion for retail investors about whether a fund is sustainable.
“I don’t think the EU will rush into a labeling system,” he told a conference on Irish funds in London.
Ireland, which has €1.2 trillion ($1.31 trillion) of assets under management in environmental, social and governance investments, is one of the main EU hubs for listing funds, many of which are managed from London.
Rowland said Ireland would not unilaterally legislate on the labeling system because it was better to work “in harmony” with the EU.
He noted that the EU is already consulting on limited changes to the Sustainable Financial Disclosure Regulation (SFDR), which sets out how asset managers must disclose environmental, social and governance factors.
The EU faces resistance to introducing more ESG rules, with Rolland speaking of compliance “fatigue”.
According to Rolland, the labeling rules are likely to be approved by the new European Commission, which is scheduled to be appointed in the fall of next year.
($1 = 0.9168 euros)
(Reporting by Hugh Jones; Editing in Spanish by Javi West Larrañaga)
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