In recent years, the financial sector has undergone a major transformation, driven by public expectations of environmental responsibility. It all began with the introduction of ESG criteria (Environment, Social, Governance), popularised by Kofi Annan in 2004-2005 during his term as Secretary General of the United Nations, and many changes and obligations are now pushing for greater transparency on the part of financial market players.

A look back at the history of these developments

As society becomes increasingly aware of environmental and ecological issues, it is only natural that the regulatory environment should follow this trend. Thus, in 2016, the SRI label was created by the Ministry of the Economy and Finance. The label distinguishes funds with a good ESG rating. The aim was to enable investors to make informed investment choices based on their own convictions. This label, under the governance of a 13-member committee, is constantly evolving in order to continue to promote socially responsible investment.

How can we avoid "Greenwahing"?

Unfortunately, these honourable hopes are sometimes dashed by misleading practices known as "Greenwashing". This consists of improperly communicating virtuous practices or environmental responsibility in contradiction with the company's actual practices. To avoid this, the European regulation known as SFDR (Sustainable Finance Disclosure) came into force on 10 March 2021. The aim of this regulation is to harmonise and strengthen the obligations of all players in the financial world. They are now required to publish precise information about their investment policies. Two types of financial product stand out from the crowd under this obligation, presenting specific extra-financial characteristics. These are the so-called :

- Article 8: promoting environmental or social characteristics,

- Article 9: when they pursue a sustainable investment objective.

To provide a framework for these regulations and introduce a clear classification system, the European Commission has introduced the "Taxonomy Regulation". This governs all the criteria used to classify economic activities and justify whether or not they are sustainable and responsible.

In an ever-changing financial world, where everyone has their own convictions, there are many criteria that need to be assessed when it comes to investing your money. It is vital to be supported by specialists. The financial advisers at Wealth A7 are here to help you. Contact us now!