BRUSSELS: Fossil fuel developers should be excluded from financial investments labelled sustainable, NGOs and associations urged on Tuesday.
More than 120 signatories including organisations such as Reclaim Finance, financial institutions and legal experts made the call in an open letter to Brussels.
They urged the European Commission to offer “sufficient safeguards to prevent greenwashing” in any reform of the EU’s green finance transparency rules.
The European Commission will propose how to revise the 2021 rules known as the Sustainable Finance Disclosure Regulation later this year.
Current rules feature three different labels to help investors gauge the sustainability of financial products.
The highest level must have a sustainable investment objective, while products at the second highest level must meet less stringent environmental, social, and governance criteria.
A third category exists for funds that do not meet any of these requirements.
Paul Schreiber of Reclaim Finance stated that “if the European Commission truly wants to tackle greenwashing in the financial sector, then it must at the very least exclude fossil fuel expansion from the entire range of sustainable fund categories”.
The rules aim to encourage investments in sustainable activities but critics say they are too vague.
Various organisations including financial sector authorities and regulators have urged a thorough review of the categories.
The European stock market regulator ESMA earlier this year required funds using “ESG” or “sustainable” in their name to exclude firms with more than 1% revenue from coal or 10% from oil. – AFP
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