EC's Long-Term Investment Funds should adopt 'comply or explain' on SRI

The European Commission should require asset managers launching European Long-Term Investment Funds (ELTIF) to disclose the social impact of all investments, asset manager Mirova has suggested.

Gwenola Chambon, head of infrastructure funds at the Natixis Asset Management subsidiary, said she was “amazed” there seemed to be little interest in enshrining the notion of fostering socially and environmentally sustainable growth as part of ELTIFs’ investment goals, despite the responsible investment (RI) emphasis of the Commission’s Green Paper on Long-Term Investing.

She told IPE all parties involved in the development of ELTIFs at first seemed “very enthusiastic” about the inclusion of an RI emphasis.

“Now we have ended up with something that is clearly a long-term investment tool, but does not anymore have anything related to that aspect, which is to me very surprising,” she said. 

“We end up with a European tool that is there to foster the economy, there to channel long-term funds, yet has nothing to say on that aspect [sustainable investment], which is too bad.”

The initial legislative proposal for the ELTIF regulation, published in June last year, noted that “sustainable, smart and inclusive growth” was key to fostering European economic growth less susceptible to systemic risks.

Chambon said the least the industry should expect from the Commission was for the regulation to be amended to include a requirement for asset managers launching ELTIFs to disclose their approach to socially responsible investment.

“Any asset manager should at least explain how he wants to commit through that tool to social and responsible investment responsibilities – whether it has no particular objective, or whether it has – and if it has, to be very concrete on what it wants to do and what it wants to implement,” she said.

She said infrastructure, and particularly social housing, were assets forming the building blocks of a society.

“We are creating assets that will have an impact on several generations,” she said. “We can’t afford not to think about the social and responsible impact on our environment and the economy in general.”

PensionsEurope has previously suggested the European Investment Bank should offer both capital guarantees and its own expertise to assessing infrastructure projects backed by ELTIFs.