BETTER FINANCE welcomes the setting of mandatory criteria for the Ecolabel. The issue with any point system is that it may reveal gaps in correctly weighting the criteria for awarding points depending on certain circumstances. Therefore, we support the creation of an ecolabel with mandatory requirements. The mandatory (pass/ fail system) provides a stronger market recognition and an improved transparency in comparison to a point-based system.
Even if the point-based system allows a greater volume of products to be potentially eligible, in order to encourage mainstream financial actors to apply for the label, this does not always provide concrete benefits for retail investors. Indeed, a more flexible system, as the point-based one, allows to market financial products that have weaker environmental standards compared to a mandatory system.
This is all the more important as citizens as savers and individual investors have little trust in investment products, as confirmed for many years by the EC consumer scoreboard. The Ecolabel is a unique opportunity to regain the trust and confidence of individual investors. It must not fail and therefore be awarded only to investment products that truly fund sustainable activities and are exemplary in terms of information disclosure and compliance with EU investor protection rules.