News & Analysis

French investor group warns against increased climate focus for SRI label

Consultation also prompts calls from industry body for French ESG labels to be unified under a sustainable finance framework.

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A leading French investor association has warned against an increased emphasis on climate in the revision of the French government’s Socially Responsible Investment (SRI) label for investment funds.

In a statement released this week, the Association Française de la Gestion Financière (AFG) said: “The label’s general status is one of its main strengths. The consideration of climate in fund strategy must not come at the cost of the other E, S and G aspects of this label.”

The APG has also asked for ESG labels issued by the French government to be unified.
This statement follows an extended review of the SRI label, which was launched by the French Ministry of Economics and Finance in October 2021 with the aim of creating stricter rules for accreditation. The label was created in 2016 and is awarded after a review by an independent body.
An assessment led by Nicola Notat, founder of Vigeo Eiris, concluded that improvements to the process were necessary to meet the expectations of investors and savers.
In the proposed updates to the SRI, the label committee pledges to create a “robust and strict” platform that could eventually be used as a foundation for future French ESG labels. The committee is headed by Michèle Pappalardo.
The guidelines, issued by the committee, are broken down into six aims: reassertion of the label’s goals, with a view to reducing the investment fund universe by 20 percent; new demand for double materiality; guarantee of a balanced ESG approach; consideration of climate in fund strategy; adaptation of the guidance for different asset classes; and clarification of the ambiguous aspects of the existing framework.

The APG expressed concerns around the singling out of climate in the amended guidelines, warning that “the label’s broad status is one of its main advantages”.

The association is also asking for existing French labels – such as SRI, Greenfin and Finansol – to be grouped into a common sustainable finance framework in order to highlight the benefits of increased credibility and visibility.

The SRI and Greenfin labels control 6 percent and 1 percent of the French domestic market share, respectively, according to Banque de France data from 2019.

As of 6 June, there were 1,070 funds with the official French SRI label, according to data provider Funds360.

The APG represents more than 700 investors with assets under management of €4.8 trillion. Members include Amundi, AXA Investment Managers, BNP Paribas Asset Management and Mirova.

BNPP AM, which currently has 66 SRI-labelled funds with a total of €68.7 billion in assets, is in favour of maintaining the label’s “general” status, which allows it to be recognised internationally. The asset manager believes the SRI should evolve in a “coherent and consistent way with other EU regulations, such as SFDR, to avoid duplication”.

The asset manager reiterated the AFG and recommends the adoption of a “single European label that would create a harmonised framework to replace existing national labels”.

Mirova has also independently called on the SRI committee to “go further to maintain a genuine purpose” for the label and criticised the proposed changes for seeming “a long way off from providing satisfactory answers” to investors’ and savers’ sustainable investment opportunities.

The statement added that the label should “require explicit and ambitious environmental and social objectives in the fund’s strategy, similar to the demands outlined by SFDR for Article 9 funds”. It described the new demand for double materiality as “general” and “minimal” in its impact, echoed by the AFG, which asks for the label’s transparency to be aligned with SFDR.

A public consultation on the revised guidelines closed on 9 September. The SRI committee is currently examining the responses it received and has not yet released a statement regarding the feedback.