What exactly are sustainable investments? How effective are they in driving positive change? How is the world of sustainable finance evolving?

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Florian

An interview with Florian Heeb: can sustainable investing save the world?

Something interesting happened in Italy earlier this year and we think you should know about it. One Italian company, Alcantara, took a competitor, Miko, to court, accusing them of greenwashing. Alcantara argued that Miko, in describing its suede-like microfiber product Dinamica as “green” was competing unfairly. The accusation of “misleading advertising” was based on the EU’s Unfair Commercial Practice Directive (UCPD). Alcantara won. And Miko was instructed by the court to immediately change its marketing pitch, or face hefty fines.


Harald

<h2>A novel development</h2>
Something interesting happened in Italy earlier this year and we think you should know about it.
One Italian company, Alcantara, took a competitor, Miko, to court, accusing them of greenwashing. Alcantara argued that Miko, in describing its suede-like microfiber product Dinamica as &ldquo;green&rdquo; was competing unfairly. The accusation of &ldquo;misleading advertising&rdquo; was based on the EU&rsquo;s Unfair Commercial Practice Directive (UCPD). Alcantara won. And Miko was instructed by the court to immediately change its marketing pitch, or face hefty fines.
If you want to learn more, google &ldquo;Alcantara &amp; Miko&rdquo; and you&rsquo;ll find various articles providing the particulars. The reason we bring this up here are:
<ol>
<li>This is the first time, as far as we know, that a civil court orders a company to stop greenwashing, at the request of a competitor. And if this can happen in the world of synthetic suede, it can happen in the world of investing. And if a competitor can take the initiative, so can a customer, a regulator or another interested party. From a consumer protection point of view, that&rsquo;s a good thing. But looking at the need for more innovation in the market for impact investment it may come with challenges.</li>
<li>In reaching its decision, the Italian court relied on what&rsquo;s known as &ldquo;soft law&rdquo; &ndash; guidelines and other quasi-legal instruments that don&rsquo;t have legally binding force but can nonetheless be found to apply to real-life situations &ndash; in the green-suede case a &ldquo;EU Commission Staff Working Document&rdquo; that provides guidelines on how to implement an EU directive. This kind of soft law also applies to ESG funds, even if most banks, fund managers and even regulators may be unaware of this.</li>
</ol>
We&rsquo;ll discuss both points, as well as the implications for the impact investing market.
<h2>Relevance for investors</h2>
Why is the &ldquo;soft law&rdquo; point relevant to investors? Well, because there&rsquo;s a whole universe of rules out there that apply to ESG / impact funds, and that could be used by consumers, competitors, regulators or other interested parties to haul greenwashing financial institutions in front of a judge.
Take, for example, this document: &ldquo;<a href="https://ec.europa.eu/info/sites/default/files/compliance_criteria_2016_en.pdf">Compliance Criteria on Environmental Claims &ndash; Multi-stakeholder advice to support the implementation/application of the Unfair Commercial Practices Directive 2005/29/EC</a>&rdquo;, also known as MDEC, because it was developed by the Multi-stakeholder Dialogue on Environmental Claims.
Subtitled Helping consumers make informed green choices and ensuring a level playing field for business, it sets out a whole range of criteria that apply whenever &ldquo;environmental claims&rdquo; are made:
The expressions "environmental claims" or "green claims" refer to the practice of suggesting or otherwise creating the impression (in the context of a commercial communication, marketing or advertising) that a product or a service, is environmentally friendly (i.e. it has a positive impact on the environment) or is less damaging to the environment than competing goods or services.
In other words, looking specifically at the underlined terms, we would argue that these criteria likely apply to most ESG funds out there. Importantly, &ldquo;creating the impression&rdquo; is enough to qualify as a claim, these do not necessarily need to be explicit. So, what are the criteria?
<h3>The articles</h3>
There&rsquo;s a whole laundry list, we&rsquo;re just summarizing the main ones here:
Article 2.1 &ndash; Content of the claim: &ldquo;environmental claims should reflect a verifiable environmental benefit or improvement and this should be communicated in a precise manner to consumers &hellip; should be clear and unambiguous &hellip; [and] meaningful and relevant to the environmental performance of the product &hellip; should reflect an environmental benefit beyond that which is already considered as a common practice.&rdquo;
Article 2.2 &ndash; Clear and accurate presentation: &ldquo;[The claim] should be presented in a way that is accurate, clear, specific and unambiguous to ensure consumers are not misled about the intended meaning &hellip; wording (&hellip;) should be a truthful and accurate representation of the scale of the environmental benefit, and should not overstate the benefit achieved &hellip; plain language should be used that is clear and easy for consumers to understand.&rdquo;
Article 2.3 &ndash; Claim substantiation and documentation: &ldquo;claims should be based on robust, independent, verifiable and generally recognised evidence which takes into account the latest scientific findings and methods &hellip; must have scientific evidence to support their claims and be ready to provide it (&hellip;) in case the claim is challenged &hellip; should be measured using the most appropriate methods &hellip; independent third party testing should be made available (&hellip;) if the claim is challenged&hellip; [should] communicate about environmental achievements instead of aspirations of future environmental performance&hellip; this does not prevent companies from communicating on future environmental efforts (&hellip;) if they deem this necessary or useful [but] companies should only do this when they have established a realistic plan with clear targets and timescales, involved relevant stakeholders and ensured third party monitoring of commitments.&rdquo;
<h3>Their importance</h3>
Why are we quoting these requirements in such detail? Three reasons:
<ol>
<li>To show that many of the regulations meant to counter greenwashing, such as SFDR, are in many ways redundant &ndash; the rules needed to act on greenwashing already exist and, as the not-really-green-suede case shows, can be applied in a court of law.</li>
<li>Perhaps more importantly, and if this document is any guide, impact funds will also need to be of the &lsquo;impact-generating&rsquo; variety, as compared to the &lsquo;impact-aligned&rsquo; variety. This, we believe, is demonstrated by the use of the term &lsquo;benefit or improvement&rsquo;, which suggests there needs to be a causal relationship.</li>
<li>Even more importantly, launching impact investment funds that can meet all of these requirements is a very, very tall order: even banks and asset managers with dedicated resources, with true intentionality and long track records in impact investment would struggle mightily. This means even funds that deliver the real deal &ndash; genuine, impact-generating, additional, intentional impact &ndash; could be indicted for greenwashing. This is also because, while there is increasing agreement that &lsquo;impact investment&rsquo; requires providing proof of a causal relationship, there is no consensus whatsoever on how this proof can be delivered, just a spreading suspicion that impact measurement isn&rsquo;t doing the job.</li>
</ol>
<h2>Our perspective</h2>
We are supportive of measures designed to protect consumers, and there are enough investment products on the market that would benefit from a higher bar for evidence behind green marketing claims. Yet, we are also concerned that this kind of exceedingly strict set of requirements may stifle the much-needed innovation in the impact investment market.
In the excellent book &ldquo;How Innovation Works&rdquo;, Matt Ridley explains that most innovation is a &ldquo;gradual process&rdquo;, where often trial and error is &ldquo;vital&rdquo;, that &ldquo;use often precedes understanding&rdquo; (in other words, we often use new technologies before we know how and why they work), and that usually any successful innovation is preceded by a &ldquo;pre-history characterized by failure.&rdquo; Ridley says that &ldquo;Innovation is &hellip; a collective, incremental and messy network phenomenon.&rdquo;
If we apply the existing rules strictly to the fledgling market for impact investments, we will almost certainly not enable a messy, incremental process of trial &amp; error and experimentation that celebrates failure as a means to learning and improvement. Instead, we are likely to stifle innovation and discourage budding endeavors to service investors with a desire to contribute to solving societal problems.
<h2>What next?</h2>
What can we do about this? In our view: education, education &amp; education (and research).
Banks &amp; asset managers: should not be too easily tempted by the lure of Article 8 &amp; 9 lucre, or rely too eagerly on their ESG departments&rsquo; impact blessings; rather they should involve their investment teams and product development capabilities and engage with the academic world to educate themselves on evidence-based ways to structure impact-generating investments.
Consumers: should be able to have frank conversations with their banks and financial advisors, where it would be explained that having a substantial impact in the listed equity space is difficult, if not impossible, and that investing with impact may require a different risk/return appetite.
Regulators &amp; judges: should read up on the impact investment literature and be informed by academics and practitioners alike, in order to focus on avoiding true greenwashing while not stifling innovation in the burgeoning impact investment market. This may require more emphasis on solid theories of change and qualitative assessment methods, rather than more binary labels and black or white classifications that fail to capture the subtle balance that needs to be struck between impact, risk, return and client interest.
Academics: should develop practically applicable impact assessment methods for investment products. Some thirty years ago, the need to make informed decisions based on the environmental impact of &ldquo;physical&rdquo; products (think: paper cups vs. reusable cups?) led to the development of life cycle assessment (LCA). Today, LCA is an entire science but is standardized enough to be applied by industry actors and a host of consultancies. We need &ldquo;LCA&rdquo; tools for investments, that set the standard for what &ldquo;evidence for impact&rdquo; should look like in the investing space.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

What fake suede and the future of impact investment have to do with one another

We’ve just celebrated the first birthday of the Sustainable Finance Disclosure Regulation (SFDR), and we can observe that few things ‘ESG’ have been the recipient of so much praise, time, effort, attention, and money as the SFDR – and this in just one year. SFDR has been heralded by ESG enthusiasts as a key tool to direct capital towards sustainability objectives, most notably the Paris Agreement and the Sustainable Development Goals (SDGs).

<h2>The objectives of the SFDR</h2>
We&rsquo;ve just celebrated the first birthday of the Sustainable Finance Disclosure Regulation (SFDR), and we can observe that few things &lsquo;ESG&rsquo; have been the recipient of so much praise, time, effort, attention, and money as the SFDR &ndash; and this in just one year. SFDR has been heralded by ESG enthusiasts as a key tool to direct capital towards sustainability objectives, most notably the Paris Agreement and the Sustainable Development Goals (SDGs).
Another key objective of the SFDR is countering greenwashing. However, asset managers, rather than taking SFDR as their cue to do some deep thinking about what makes a product genuinely green, embraced it as a convenient labeling scheme allowing them to sell even more funds as &lsquo;ESG&rsquo;, but now rubber-stamped by EU regulation.
But even if there has been some criticism to do with these unintended consequences and the &ldquo;promote&rdquo; language in Article 8, most have fallen all over themselves to hail SFDR as a key milestone, to become SFDR compliant, and to label as many funds as possible as &ldquo;Article 8&rdquo; or &ldquo;Article 9&rdquo;.
<h2>An overlooked design flaw</h2>
However, in this hullabaloo, a small but crucial design error has been largely overlooked. We think fixing it is imperative, if SFDR is to be effective in reaching its two key stated goals of (1) directing more capital towards sustainable investments and (2) preventing greenwashing, or protecting consumers&rsquo; interests. We also think fixing it is simple and requires just six letters.
First a quick recap: SFDR is the 2021 EU regulation that requires financial firms to publish various things: an ESG policy with information on how they integrate sustainability risks; information on how they consider &ldquo;principal adverse impacts&rdquo; of their investments; and remuneration policies that &ldquo;are consistent&rdquo; with the integration of sustainability risks.
Firms also need to provide product-, or fund-level information. And this is where the (in)famous Article 6, 8 and 9 classification comes into play: the required disclosures are different depending on whether a fund &lsquo;only&rsquo; integrates sustainability risks (Article 6); &ldquo;promotes environmental or social characteristics&rdquo; (Article 8); or &ldquo;has sustainable investment as its objective&rdquo; (Article 9). All funds need to disclose how sustainability risks are integrated and what their likely impact on returns are (or why those risks are not deemed relevant); Article 8 funds need to disclose how the &ldquo;ESG characteristics&rdquo; they promote are met. Article 9 funds need to do even more: they need to explain what their particular sustainable investment objective is, how they intend to achieve it, and also measure and report on progress.
The basic design error lies in Article 9 and has to do with the concept of &ldquo;impact&rdquo;.
Even though Article 9 does not mention the word &ldquo;impact&rdquo;, it is clear from the text, and from the additional requirements in Article 10, that Article 9 was intended to serve as the category for what the marketplace refers to as &ldquo;impact investments&rdquo;. So, investments with the explicit objective to generate measurable and additional real-world impact.
<h2>Factors for the rise of sustainable investing</h2>
At this point, it is crucial to consider why many consumers, or retail investors, care about sustainable investing, or have a &lsquo;preference&rsquo; for sustainable investing, to begin with. The available evidence shows that there are different motivations underlying their preferences. First, there are those who care about aligning investments with their values, who for example don&rsquo;t want their investments to be associated with tobacco or weapons manufacturers. Second, there are those who care about financial risks and returns and who want to know their bank or pension fund considers ESG, to avoid risky investments (e.g., coal companies that may go out of business in a Net Zero world), or to select firms that perform well on ESG metrics and may therefore also perform well financially. Third, there are consumers who turn to sustainable investments because they want to contribute to a better world, solve society&rsquo;s problems, help to achieve the Sustainable Development Goals, or facilitate the energy transition. In short, they care about sustainable investing because they want to have &ldquo;impact&rdquo;.
Thanks to the 2&deg; Investing Initiative and their study &ldquo;<a href="https://2degrees-investing.org/resource/retail-clients-sustainable-investment/">A Large Majority of Retail Clients Want to Invest Sustainably</a>&rdquo; we know that, by far, most consumers (at least, in Germany and France) are interested in sustainable investing because of the third reason: because they expect, or are told, that this allows them to have &ldquo;impact&rdquo;.
Now, back to Article 9 SFDR.
Article 9 applies when a fund has &ldquo;sustainable investment&rdquo; as its objective. And &ldquo;sustainable investment&rdquo;, according to SFDR, means an &ldquo;investment in an economic activity that contributes to an environmental objective or a social objective&rdquo;. The operative word here is &ldquo;in&rdquo;, and we will argue that this word should be replaced. Or rather, should be supplemented with our six letters.
Let us explain.
First, it&rsquo;s important to consider the difference between company impact and investor impact. Company impact is where a company undertakes impactful activities. For example, it manufactures windmills or solar panels, or it helps socially disadvantaged communities. Investor impact is the change in company impact you, as an investor, induce, or enable, through your investments. The idea here is what, in impact circles, is often called &lsquo;additionality&rsquo; &ndash; the investment should allow something to happen that would otherwise not happen. There is a causal relationship. Or framed differently: investing in a green firm does not make the world greener, if it does not cause the green firm to grow, or to become greener. And, as our research shows, this additionality strongly depends on the characteristics of an individual investment, and cannot be taken as a given.
Second, you need to know that most funds of the type that are currently classified as Article 9 invest in companies who generally do not have difficulty financing their activities &ndash; usually they are publicly listed, very profitable and very large. Also, usually, when these funds invest in those companies, the money to buy the shares does not actually go into the companies &ndash; it goes to the seller of the shares, often just another investment fund, a pension fund, or an asset manager. In other words, even if those companies are impactful, they don&rsquo;t generally need additional financing to be even more impactful, and even if they do, they don&rsquo;t get the financing by being included in Article 9 funds.
All this is a very roundabout way of saying that:
<ul>
<li>Consumers are drawn to sustainable funds because they want to have &lsquo;impact&rsquo;; and</li>
<li>SFDR Article 9 lets banks and asset managers sell their funds as &lsquo;impact funds&rsquo;; yet</li>
<li>SFDR Article 9 does not actually require there to be &lsquo;impact&rsquo;; and therefore</li>
<li>SFDR does not incentivize banks and asset managers to design funds that in fact direct capital to sustainability goals, and that enable change; and what&rsquo;s more:</li>
<li>SFDR lets financial firms sell &lsquo;impact funds&rsquo; to consumers who want to have &lsquo;impact&rsquo;, and think they are buying &lsquo;impact&rsquo;, but are, in fact &hellip; not getting &lsquo;impact&rsquo;.</li>
</ul>
<h2>Recommendations for the Commission</h2>
All of this can be quite easily fixed by adding just six letters to the SDFR text: A, B, E, G, L and N. The EU Commission needs to make a tiny change to Article 2 (Definitions), paragraph 17, which defines the term &ldquo;sustainable investment&rdquo;: &ldquo;&lsquo;sustainable investment&rsquo; means an investment ENABLinG an economic activity that contributes to an environmental objective, (&hellip;.) or an investment in an economic activity that contributes to a social objective, in particular (&hellip; etc.).&rdquo; In other words, change the &ldquo;investments in an economic activity&rdquo; to &ldquo;investments enabling an economic activity&rdquo;, and we are all set for a financial market with a vigorous and vital competition to fulfill consumers&rsquo; demand for real-world impact.
We believe that this quick fix will go a long way to ensuring that at the second birthday of the SFDR the EU Commission can claim that SFDR is truly incentivizing the financial sector to help direct capital towards environmental and social objectives. And that it can also live up to its promise of end-investor protection. Consumers want &lsquo;impact&rsquo;, and they will know that Article 9 funds provide it.
Now, how much more impactful than that can you be?
Six letters is all it takes.
You can thank us later.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

A-B-E-G-L-N: how adding six letters to SFDR can make it ‘work’

MiFID should require financial firms to ask about consumers’ sustainability objectives instead of preferences. Because what motivates most consumers about sustainable investments is having impact.

MiFID should require financial firms to ask about consumers&rsquo; sustainability objectives instead of preferences. Because what motivates most consumers about sustainable investments is having impact.
A couple of weeks ago, there was some good news for those who believe that ESG investing, or sustainable investing, should be even higher on the agenda than it already is: the European Securities and Markets Authority (ESMA), the EU&rsquo;s securities markets regulator, is&nbsp;<a href="https://www.esma.europa.eu/press-news/consultations/consultation-guidelines-certain-aspects-mifid-ii-suitability-requirements-0">consulting</a>&nbsp;on suitability requirements under the Markets in Financial Instruments Directive (MiFID II), in order to update its guidelines relating to sustainability.
Under the proposed rules, financial firms will need to collect information about their clients&rsquo; &ldquo;sustainability preferences&rdquo; and recommend only financial products that fulfill those preferences.
What are ESMA&rsquo;s aims with this new rule? As we&rsquo;ve come to expect with ESG or sustainability-related regulatory initiatives, there is a whole laundry list: facilitating the transition to a low-carbon, more sustainable, resource-efficient, and circular economy in line with the Sustainable Development Goals (SDGs); strengthening the response to climate change by, among others, making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development; giving clear signals to investors that they should avoid stranded assets; raising sustainable finance to reorient capital flows towards sustainable investments to achieve sustainable and inclusive growth; ensuring sustainability factors are taken into account by investment firms as part of their duties. And last but &ndash; we would argue &ndash; certainly not least, investor protection and countering greenwashing.
Worthy goals and laudable steps, no?
Yes, but the MiFID proposal misses the mark by a wide margin on two points: First, it is based on a rather technocratic understanding of sustainability preferences, focusing entirely on alignment with existing, complex regulation, instead of straightforwardly asking what investors expect from sustainable investing products. Second, it rests on opaque and largely unrealistic notions of how sustainable investment products, today, actually contribute to solving societal problems.
On the first point: over the last few years, academics, investment firms, and sustainability professionals have come round to the view that consumers have different motivations to engage in sustainable investing. Basically, there are three: (1) &lsquo;impact&rsquo; &ndash; contributing to a better world through investments; (2) &lsquo;values-alignment&rsquo; &ndash; avoiding association with &lsquo;bad&rsquo; or &lsquo;amoral&rsquo; companies through investments; and (3) &lsquo;performance&rsquo; &ndash; optimizing financial risks and returns by considering sustainability aspects.
A 2020 study, &ldquo;<a href="https://2degrees-investing.org/resource/retail-clients-sustainable-investment/">A Large Majority of Retail Clients Want to Invest Sustainably</a>&rdquo; (2&deg; Investing Initiative), shows rather convincingly that, yes, about 2/3 of consumers are interested in sustainable investing, or have &lsquo;preferences&rsquo;. But in that group, most consumers are driven by the first motivation. That is, they are drawn to sustainable funds because they hope that this allows them to have impact, in other words, to contribute to a better world. To be sure, the second and third motivations also play a role, but a smaller one.
The study is based on a survey asking probing questions about consumers&rsquo; specific preferences and reasons why they decided to buy, or not to buy, sustainable funds. The answers are revealing. When offered sustainable funds, about half of respondents said they wanted more information, in particular to &ldquo;know more about the potential consequences on my profits; know what exactly are the activities and how they help with addressing these social and environmental issues; see hard evidence of their effectiveness in addressing these issues.&rdquo; When asked why they decided not to invest in impact funds, about half of respondents said, &ldquo;It looks like a marketing trick, not sure those funds have any concrete impact.&rdquo;
Another study by the 2&deg; Investing Initiative, &ldquo;<a href="https://2degrees-investing.org/resource/marketing-claims/#:~:text=EU%20Retail%20Funds'%20Environmental%20Impact%20Claims%20Do%20Not%20Comply%20with%20Regulatory%20Guidance,-Report%20Retail%20investing&amp;text=To%20draft%20this%20report%2C%202DII,%2Dthemed%22%20European%20investment%20funds.">EU Retail Funds&rsquo; Environmental Impact Claims Do Not Comply</a>,&rdquo; shows that &ndash; while over half of a sample of 230 ESG funds make environmental claims, most claims remain entirely vague. And hardly any fund provides evidence backing up the impact claims that are made. So why do consumers who, if probed in-depth, say they are mainly interested in real-world impact still flock to such funds that do not provide it?
The explanation can be found in the pivotal role that social norms play in responding to questions such as &ldquo;are you interested in investing sustainably?&rdquo; When asked, consumers usually respond affirmatively and&nbsp; even seem willing to sacrifice thousands of euros for &lsquo;green&rsquo; products, even if those do not deliver any substantial evidence for their green credentials. In fact, most consumers may never have dedicated any time and brain space to the topic or may have never considered this arguably complex issue before. And when faced with complex new questions, they tend to adhere to the social norm: what is &lsquo;the normal thing&rsquo; to do? In these situations, financial firms may be able to sell anything that looks remotely green to consumers who want to make the world a better place.
Instead of protecting consumers in such situations by forcing financial firms to clarify clients&rsquo; motivations and to be transparent about how their products satisfy them (or not), the MiFID proposal makes things easier for financial firms, and more difficult for consumers. If the aim is to protect consumers, MiFID should require discussing &ldquo;sustainability objectives&rdquo; in easily understandable terms, instead of &ldquo;sustainability preferences&rdquo; defined with reference to complex regulatory initiatives such as SFDR and the Green Taxonomy. This may seem like a subtle difference, but it would be a much better way of framing the issue, and would likely lead to better conversations with clients.
But how difficult would it be to go slightly further and to include in MiFID the requirement to discuss the three motivations of sustainable investing? Asking consumers whether they want to a) have impact, b) align their portfolios with their personal values, or c) use ESG factors to optimize risk and return would be much more effective in teasing out their true motivations. These objectives were first mentioned in research years ago and have by now been widely accepted by sustainability professionals, academics and financial firms.
This leads to our second, and perhaps more important, argument: the fact that the MiFID rule appears to assume that inflows into sustainable investment funds, as they currently are, will make a substantial contribution to fixing societal problems. In contrast, various studies have shown that most &ldquo;ESG,&rdquo; &ldquo;impact,&rdquo; or &ldquo;sustainable&rdquo; funds, in fact,&nbsp; contribute very little to solving those problems.
Firstly, this is because asset management firms currently have few incentives to structure funds for them to have a meaningful impact. Asset management firms need to up their game in this area, and having discussions triggered by MiFID &ndash; at least if it follows our recommendation above &ndash; would help them see that this is what their clients demand. What we would hope for is a market that competes for risk, return, and real-world impact &ndash; instead of merely finding the easiest ways to get products classified &lsquo;sustainable&rsquo; in line with Article 8 or 9 SFDR.
Secondly, this is because many of society&rsquo;s significant problems, like those captured in the SDGs, do not yet come with simple solutions that can be implemented by listed companies or easily packaged in conventional investment strategies and sustainable funds. Most require highly complex financing solutions involving governmental agencies, development banks and NGOs. Today, institutional investors like pension funds and insurance companies, let alone retail investors, hardly ever cooperate with these actors.
If ESMA and the EU want to reach all those laudable goals mentioned in the MiFID proposal preamble, it will take much more than mapping investment customers&rsquo; sustainability preferences or objectives, as important as that is. It requires the facilitation of complex public-private partnerships in order to structure solutions to these problems and finance them, at scale. And we don&rsquo;t have to argue here that this work is urgent: every day, we are reminded that the 2030 deadline for the SDGs is coming closer and closer and that we are nowhere near meeting the Paris climate goals.
ESMA should focus on investor protection and the countering of greenwashing and bring MiFID in line with emerging best practice by referencing the three investor motivations for sustainable investing. This should also incentivize asset management firms to expand their impact offering. But ESMA should also be more transparent and realistic about what this will do to solve society&rsquo;s problems &ndash; and that much more is required. EU agencies and national governments should establish collaborative platforms to solve urgent problems and find workable solutions to fund them.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Energy &amp; Sustainability writers, their opinions do not necessarily represent those of illuminem.

Florian Heeb

Florian Heeb

An interview with Florian Heeb: can sustainable investing save the world?

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