The socially responsible investment (SRI) label committee, the main label for sustainable development funds in France, unveiled a new, more demanding allocation framework on Tuesday with the ambition of becoming a benchmark for savers. As of March 31, 2023, close to 1,200 funds worth 773,000 million euros had received this seal, whose award conditions had barely changed since its launch in 2016 and which was increasingly criticized for the weakness of its criteria.
Tightened eligibility criteria
Tagged funds will now have to “declare specific objectives” in each of the three environmental, social and governance pillars. For the first time, the label will exclude certain companies. In environmental matters, no company whose 5% of its activity is linked to coal or which develops “new exploration projects” in unconventional hydrocarbons, more difficult to extract, may be part of it.
The label will also require an “analysis of climate transition plans” from companies and further monitoring of their goals to reduce greenhouse gas emissions. The criteria for obtaining the label will also be tightened to retain more virtuous companies in the “investment universe” or increase the average rating of the portfolios in terms of environmental, social and governance criteria.
SRI will serve as the “base” for other more specific labels
Also responding to the criticism, the president of the label, Michèle Pappalardo, had promised on Thursday, during a press conference, a “stricter” control of the investment universe by the certifiers to “close the doors” to the managers who would try to introduce less virtuous companies. The idea of creating a label with various levels of requirements has also been discarded, with the SRI serving as the “base” for other labels that may be more specific, according to Michèle Pappalardo.
These provisions are subject to consultation with financial actors until May 31. A final version will then be sent to the Ministry of Economy, waiting for the label committee to be able to validate the first funds according to these new criteria as of January 1, 2024.
Source: BFM TV
