FIR calls for enhanced climate and social criteria in SRI label reform
The Forum for Responsible Investment (FIR) has urged a significant strengthening of the Socially Responsible Investment (SRI) label. In its September 2022 response to a consultation, FIR emphasized the need to combat greenwashing and integrate robust climate and social objectives.
Combating greenwashing with stricter standards
The Socially Responsible Investment (SRI) label aims to guide retail savings towards a sustainable economy.
However, growing public distrust regarding sustainable development, fueled by real or perceived "greenwashing," has become a central concern.
The Forum for Responsible Investment (FIR) emphasizes that the label must guarantee high levels of ambition and quality to maintain credibility.
Following a report by the Inspection générale des finances, FIR welcomes several general principles of the consultation, including a balanced ESG approach, systematic consideration of climate and biodiversity, integration of double materiality, and the introduction of exclusions for coal and unconventional fossil fuels.
These measures are crucial to ensure the label credibly meets evolving sustainability expectations.
Graduated ambition for responsible funds
FIR proposes a tiered approach for the SRI label, with a more stringent base level and additional tiers reflecting higher environmental or social ambition.
The base level (Level 1) would require funds to meet SFDR Article 8+ criteria, align with Paris Agreement objectives, and adopt a robust, transparent shareholder engagement policy, including exercising voting rights and engaging with portfolio companies.
Clear exclusion criteria for tobacco and activities violating the UN Global Compact are also essential.
Higher tiers, especially for climate, should mandate global fund alignment with a 1.5°C warming limit and exclude fossil fuel companies based on EU taxonomy.
Credibility hinges on rigorous standards
The proposed reform of the SRI label is crucial for restoring public trust and effectively channeling savings towards sustainable investments.
Its successful implementation demands precise definitions and consistent application across diverse financial products.
Genuine impact and the combat against greenwashing will depend on the rigor and clarity of these new standards.