European Union flags fly outside the EU Commission headquarters in Brussels, Belgium September 19, 2019. REUTERS/Yves Herman/File Photo/File Photo Acquire Licensing Rights
LONDON, Nov 30 (Reuters) – The European Union will not introduce a retail labelling system anytime soon for cracking down on misleading sustainability claims made by investment funds to attract cash, an Irish central banker said on Thursday.
Earlier this week Britain, no longer a member of the EU, set out a new system for labelling funds to stop greenwashing, or unsubstantiated claims about sustainability.
Derville Rowland, deputy governor of the Central Bank of Ireland, said that in due course the EU’s executive European Commission may further consider a labelling regime for investment products.
The EU’s securities watchdog ESMA, on whose board Rowland sits, said last month that the lack of standardised labels can lead to confusion among retail investors on whether a fund is sustainable or not.
“I don’t think you will see the EU jump too quickly now to a labelling regime,” she told an Irish Funds conference in London.
Ireland, with 1.2 trillion euros ($1.31 trillion) of assets under management in ESG investments, is a major EU centre for listing funds, many of which are managed from London.
Rowland said Ireland would not legislate unilaterally on a labelling regime as it was better to work in “lockstep” with the EU.
She noted that the EU is already consulting on limited changes to its Sustainable Finance Disclosure Regulation (SFDR), which mandates how asset managers should disclose ESG factors.
The EU is facing pushback on introducing more ESG related rules, with Rowland talking of compliance “fatigue”.
Any labelling rules would likely come from a new European Commission, due to be appointed in the autumn of next year, Rowland said.
“So I think what we need to do now… is focus on implementing what we have well.”
($1 = 0.9168 euros)
Reporting by Huw Jones; editing by Christina Fincher
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