The incoming head of finance at the European Commission has said she wants to explore the creation of a “sustainability-related categorisation system”.
Maria Luís Albuquerque has been nominated by Commission president Ursula von der Leyen as the next commissioner for financial services, financial stability and the Capital Markets Union.
She is preparing to go before Parliament in November to convince members of the European Parliament (MEPs) she is the right choice.
In her written answers to questions posed by Parliament earlier this month, Albuquerque addressed the issue of the EU’s sustainable finance agenda, which has been under fire for being too messy and burdensome for investors and companies subject to the various rules.
“If confirmed [as Commissioner], I would pursue work on the Sustainable Finance Disclosures Regulation to tackle greenwashing more effectively and enable end-investors to understand more easily the sustainability features of the financial products they consider buying,” she said, in a document published this week.
“To this end, first, we should consider changes to the environmental, social and governance disclosures for financial products, to improve comparability and reliability.”
Albuquerque added that SFDR disclosures should be “coherent with the other disclosures under the wider sustainable finance framework”, referring in part to the EU’s green taxonomy and Green Bond Standard.
She noted elsewhere that the requirement to disclose climate transition plans under various pieces of EU legislation needs to be harmonised, to avoid further fragmentation and duplication.
The SFDR is currently undergoing a review after major criticism from the investment industry about its usability, and pushback against its use by the market as a set of EU-endorsed fund labels.
The regulation is expected to be revised under the new European Commission, which will finish taking shape by the end of the year.
“Second, we need to assess the feasibility of a sustainability-related categorisation system for financial products,” said Albuquerque.
“The current misuse of the [SFRD] framework as a pseudo labelling regime poses greenwashing and investor-protection risks and does not provide an accurate categorisation of products.”
She suggested that “a simple categorisation system, which would rely on clear objectives and robust criteria” could help investors understand the sustainability credentials of products more easily, and reduce the likelihood of misleading marketing.
She also said she plans to streamline broader requirements under the EU’s sustainable finance framework, adding that it may be necessary to “adjust” existing rules to make them more practicable, and that she will avoid introducing new ones.
Albuquerque, along with von der Leyen’s other nominations for top jobs in the new Commission, will be grilled by MEPs in hearings scheduled to take place at the start of November.
There, politicians will have the opportunity to ask further questions about her plans and priorities for the next five years, before voting on her appointment later in the month.
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