Eumedion expresses general support for EU legislation on sustainable finance


Eumedion generally supports the proposals of the European Commission aiming for sustainable European capital markets. A series of draft regulations that were published in May lay the foundation for an EU framework which puts environmental, social and governance (ESG) considerations at the heart of the financial system. However, Eumedion has some reservations about a number of specific proposals, and doubts the usefulness and necessity of the proposal to amend the Benchmark Regulation. That is the key message of Eumedion’s response to the legislative proposals from the European Commission.

These proposals make the integration of material ESG factors by financial market participants the norm, and aim to increase transparency in this regard. According to Eumedion, the involvement of ESG considerations in the investment policy is part of the fiduciary duty of institutional investors. However, Eumedion does object to the proposal of the European Commission to give further substance to the so-called prudent-person rule for pension funds by means of delegated acst. Eumedion believes that prescribing detailed rules on the investment policy by pension funds is a serious infringement of the fiduciary duty of pension fund trustees.

With regard to the proposal to establish a technical screening criteria framework for assessing sustainable investments, Eumedion considers it desirable that, in addition to such criteria for ecologically sustainable investments, criteria relating to social objectives and good governance should also be developed. Eumedion believes that ESG factors are interlinked. Many environmental aspects have a social dimension, and vice versa. Moreover, good governance within a company is a perquisite to give meaningful substance to environmental and social aspects of entrepreneurship.

The English summaries of Eumedion’s comments on the various proposals can be found here with regard to the proposal on disclosures relating to sustainable investments and sustainability risks, here with regard to the proposal on the establishment of a framework to facilitate sustainable investment, and here on the proposal for amending the Benchmark Regulation on low carbon benchmarks and positive carbon impact benchmarks.