Wednesday, May 31, 2023
HomeInsuranceRevision of the SRI label to make it more selective

Revision of the SRI label to make it more selective

The SRI label was created in 2016 to distinguish funds that work in favor of socially responsible investments and has been a great success with the public. But abuse and attempted manipulation by certain leaders have tarnished its reputation. Critics pressured Bercy to reform this brand in early 2023.

The SRI label must differentiate funds that invest in companies with a real social, environmental, social and economic impact. The certification process follows strict rules and is carried out by independent bodies.

By 2022, there will be more than 1,000 SRI-branded funds. Several activists note that SRI investments do not always meet the ESG criteria that are essential to achieving the label. Some materials contain titles of companies operating in questionable sectors, such as:

  • Fossil energies;
  • Armament;
  • Atomic.

The current revision of the SRI label should rectify the situation, many SRI funds are also already available in life insurance or PER.

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More intransigence in fund selection

The revision of the SRI brand will be completed early next year, according to Bercy’s plans. The new standard for distinguishing responsible financial investments is gradually revealed, according to the proposals announced by the actors involved in the process. If the current trend continues, some funds already labeled may lose their certification if they do not upgrade their portfolio. To encourage these operators, those involved in the new certification have published the main guidelines for the future reference system. Some new features mark a radical shift from the 2016 version.

This is especially the case with the carbon footprint, an index that the funds must show in the future.

ImportantCandidates for the label will also submit a concrete action plan regarding the reduction of their greenhouse gas emissions.

The environmental aspect will have a greater place in the selection criteria. There is talk of adding exemptions for unconventional fossil fuels and coal,

ImportantIn addition to the creation of mandatory indicators to measure the real impact of the portfolios on social, environmental and good governance issues.

According to reform advocates, these new developments will prompt managers, promoters and intermediaries to make progress and improve their procedures.

Improve the visibility of responsible investments

The revision of the SRI label therefore responds to the many problems that savers and observers have reported for months.

ImportantLast May, fintech Epsor estimated that 80% of funds with the label had at least one oil, gas or fossil coal-related company in their portfolio.

The same study concludes that the label has failed in its mission to differentiate funds that respect ESG principles from those that have no environmental or social commitment. The same criticism has already been made by the Financial Supervisory Authority in 2021. In its report, The IGF points out the lack of credibility of the SRI label, which would settle for analyzing fund management processes rather than scrutinizing their content.

Because of these shortcomings, numerous foundations slip through the cracks and use their labeling to show that they are more responsible than they really are. Some brands have used the brand for greenwashing or greenwashing purposes. If all goes according to the government’s plans, this practice should end after the rebranding of SRI.

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