The Commission is currently developing the EU Ecolabel for Retail Financial Products within the framework of the Sustainable Finance Action Plan. The Joint Research Center (JRC) has presented a proposal discussed at the stakeholder meeting on 25 and 26 March to which we provide comments in this paper. The current climate and environmental crises plead for an ambitious approach of this initiative.
Labelling of financial products can help driving private capital towards the investments needed in those sectors and activities that can contribute to the sustainability and transition of our economy. It is crucial that the requirements set by the Ecolabel match the ambitions of the European Green Deal to achieve the Paris Agreement targets and the Sustainable Development Goals.
However, the current JRC proposal does not correspond to the above vision because it allows investment funds deriving only 18% of total revenue from environmentally sustainable activities to obtain the label. We find that such an extremely low level of ambition would not have an impact in driving private capitals towards sustainable activities at the scale required. Moreover, it undermines the credibility of the label as a scheme of environmental excellence, making it difficult to convince citizens and creating the risk of greenwashing of financial products.