Amundi warns of ESG in MiFID “gimmick” while EFAMA sees costs, ambiguity and disruption

The latest responses to EU consultation on sustainable finance

Europe’s largest fund manager, Amundi, says the European Commission’s draft proposals to include environmental, social and governance (ESG) factors into the MiFID rules that govern investment intermediaries risk becoming an “administrative gimmick”.

It’s the latest response to an EU consultation on its ambitious Action Plan on Sustainable Finance that has already drawn strong opposition from industry groups, as reported by Responsible Investor this week.

The €1.4trn firm also slammed the authorities’ “terrible error of timing” in proposing the changes so soon after MiFID came into force. And it also argues the amendments will create a “disproportionate burden”, saying: “The repetition of ESG at each step of the relationship will only make it an administrative gimmick instead of a key principle. We think that the final objective of the Commission is far better served by a less prescriptive approach.” 

But it backs the aims of the Commission, saying: “As an asset manager we regularly experience barriers or total lack of interest in responsible investment.”

Meanwhile, the European Fund and Asset Management Association (EFAMA), the representative body for the European investment management industry, has also weighed in with criticism – while other respondents have highlighted the risks of greenwashing.

Brussels-based EFAMA, whose members represent almost €23trn in assets, said the plans could “create additional costs, further ambiguity and disruption” throughout the distribution chain.

It is calling for a phased-in approach, with longer implementation times and more consultation with industry participants.It also questions the wisdom of putting the ESG requirement into MiFID before the EU has developed its sustainable taxonomy: “How can distributors find suitable ESG products in the short run or report on the value added by their recommendations while there is still no taxonomy in place?”

“We regularly experience total lack of interest in responsible investment.”

Sustainable banking group Triodos, while welcoming the proposals in general, said they “imply a dangerous opportunity for green-washing, which the EU must avoid!” It says the definitions allow banks and asset managers “to offer thematic funds that include some of the preferred theme(s), but don’t change the way they select and assess potential investees!”

Responsible investment campaign group ShareAction notes that the term “ESG preferences” should be clarified, saying, “confusion around this terminology abounds”.

Julia Dreblow, the former SRI Marketing Manager at Friends Provident who runs the retail investor-focused SRI Services, tweeted in response to RI’s earlier story: “I have to laugh at this opposition to increased ESG awareness! Do they have a spare planet up their sleeve?” Her submission to the consultation acknowledges, however, that the proposed definitions “are a major concern”. She, like Triodos, warns against green-wash.

Note: the consultation closes today and responses were still being submitted at the time of writing.