Effervescent Pastilles in SRI

By Olivier Johanet, President of La Financière Responsable

Regulatory effervescent pastilles recently fell into the large jar of the ISR, creating bubbling, not to say a certain confusion. Yet these various lozenges are believed to be medication that dispels the disorder in the definition and use of SRI management. The goal they display is to allow investors, especially individuals, to be guided in their choice of investment of their savings. These various pastilles come from European or French public authorities: for our country, the AMF (Autorité des Marchés Financiers), the Ministry of the Economy and Finance through the Directorate General of the Treasury, the Inspection des Finance, or the Secretary of State to the Minister of the Economy, Finance and Recovery, in charge of the Social Economy, Solidarity and Responsible; In Europe, ESMA (European Securities & Markets Authority), the European Commission with MIFID (Markets In Financial Instruments Directive). Most of these texts are given acronyms that are difficult for the general public to understand.

Therefore, in March 2020, the AMF publishes a doctrine (DOC 2020-03) applicable no later than 03/10/2021, the purpose of which is to set for France the communication standards in the extra-financial field, thus validating a SRI management. The AMF wishes to avoid “greenwashing” which had inflated SRI management and introduced real confusion in the ecosystem. Almost at the same time, with the same date of application, another tablet called SFDR (Sustainable Finance Disclosure Regulation) accompanied by application decrees in the process of being published (RTS for Regulation Technical Standards) addresses the same subject with the same objective. but with a different implementation, thus allowing competition between Authorities to appear. SFDR creates 3 categories of funds, within the management (SFDR 6, 8 and 9) establishing a gradation in the SRI implication of the proposed product. This inevitably creates a certain complexity, since for many distributors, it is necessary to offer their customers what they consider to be best, level 9, although these are indeed different objectives depending on whether adopts SFDR category 6, 8 or 9. In the next two years, other provisions (CSRD - Corporate Sustainability Reporting Directive) will specify the various extra-financial data expected from companies. Finally, it should be noted that other Public Authorities have also set to work in these areas: The General Inspectorate of Finances has proposed a modification of the contours of the French SRI label to move from a signaling label (sic) to a label of orientation towards the application of French public policies in the climate field. At the end of May 2021, the Ministry of Finance also published, for immediate application, the implementing decree of article 29 of the energy-climate law (amending, by supplementing it, the now well-known article 173 of the Law on the Transition energy and green growth) which specifies the characteristics to be integrated into investment strategies combating climate or biodiversity risks, as well as sustainability risks. Likewise, MiFID applies to regulate the way in which the savings client must be expressly involved beforehand in the SRI investment decision. Finally, let us cite the debates in the definition of a “taxonomy” which is currently green, but which must then be social, in order to better fix the outline of the spaces (Environment), S (Social) of the ESG triptych (G for Governance).


Some conclusions to be drawn from this effervescence:

  • Today, it is indeed necessary to better define the imperative standards making it possible to characterize an SRI management, based on E, S and G. (ESG) and thus restore order in this management style.

  • The competition between the various regulatory authorities, all of which strive to facilitate investors' understanding of SRI with regard to the products offered to them, is undoubtedly creating a complex and difficult to understand ecosystem, which could lead to , in fact, in reality, errors of choice.

  • The application of the principle of subsidiarity, one of the European foundations, would have deserved greater "ardor" here.



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French version HERE