Funds with exposure to the fossil fuel industry will no longer be eligible to use the state’s socially responsible investing (SRI) label in France, after proposals for a new standard were submitted during a public consultation.
Based on the recommendations of the consultation, which launched in October 2021, French Minister Bruno Le Maire unveiled a more ambitious version of the SRI label. According to Le Maire, the eligibility of the funds will “exclude companies that exploit coal or unconventional hydrocarbons, as well as companies that launch new projects for the exploration, exploitation or refining of oil or gas.” Moreover, a transition plan in line with the Paris Agreement will be necessary.
In addition to this climate principle, the renewed SRI label will also strengthen selectivity on other ESG criteria. For example, management companies will need to ensure that they limit the negative impact of their investments on ESG matters.
The new standard will be published before the end of November and will come into effect from March 1.
Speaking about the launch, Le Maire said: “We must offer a simple and effective label that allows the French to give meaning to their savings. That is what we are doing with this new SRI label, in which the fight against global warming becomes essential. This way, savers can take the ecological transition into account, and companies can finance their decarbonization more easily.”
Important step against greenwashing
Research and campaign NGO Reclaim Finance welcomed the announcement, claiming it was an important step forward in the fight against greenwashing, with the government finally recognizing the “irresponsible nature” of companies involved in the fossil fuel industry despite the emergency on the area of climate.
“By excluding companies developing new fossil fuel projects from SRI-labelled funds, Bruno Le Maire has recognized that the activities of these companies in the context of a climate crisis are irresponsible,” said Antoine Laurent, advocacy lead at Reclaim Finance.
“Although the precise criteria are yet to be specified in new guidelines, it is clear that companies such as TotalEnergies, BP and ENI will be excluded. This is a major step forward for this label in its quest for credibility, and a clear and welcome signal ahead of COP28 of the urgent need to shift financing from fossil fuels to sustainable energy.”
Reclaim Finance said it plans to pay close attention to the new standards, calling on all so-called ‘responsible’, ‘solidarity’ or ‘sustainable’ funds to adopt the same minimum exclusion criteria to ensure their credibility and avoid greenwashing.
Furthermore, given the difficulty in accessing reliable and transparent information, the group recommends the use of Urgewald reference databases, the Global Coal Exit List and Global Oil & Gas Exit List, which publicly document the activities of the fossil fuel sector and are most important. official references for the Belgian Towards Sustainability label.
Reactions from the investment sector were also positive. Philippe Zaouati, CEO of Mirova, congratulated the label committee for having managed to move in this direction despite pressure from the fossil fuel industry.
“The SRI label will become a label with a strong exclusion from the fossil fuel sector, which should lead to a significant reduction in the number of labeled funds or a major change in the management of these funds,” Zaouati said.
“This in no way diminishes the other criticisms I have leveled at the label in the past, but let’s be honest, they have now taken a back seat.”