The “green” ISR financial label will exclude fossil fuels

After two years of debate and a few weeks of tension, Bruno Le Maire, the Minister of Economy and Finance, decided on Tuesday, November 7: the reform of the “Socially Responsible Investment” (SRI) label will be at the expense of producers of ‘fossil fuels. A good surprise for promoters of “green” finance and environmental defenders who feared a minimal overhaul.

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To be able to display the SRI label, investment funds will therefore have to exclude from their portfolios companies that exploit coal or unconventional hydrocarbons and those that launch new exploration, exploitation or refining projects for oil or gas. In addition, eligible companies must have a transition plan with a view to aligning with the Paris climate agreement adopted in 2015.

According to these criteria, “it is certain that companies such as TotalEnergies, BP or ENI will be excluded from the investment scope”welcomes Antoine Laurent, France advocacy manager of the NGO Reclaim Finance, who sees in the choice of Bercy “a clear and welcome signal sent ahead of COP28 [la 28e conférence des Nations unies sur le climat, qui débutera le 30 novembre] on the urgency of getting funding out of fossil fuels and redirecting it towards sustainable energies “.

“Intrinsic weaknesses”

This result was far from being acquired a few days ago: even if the criteria retained by Bercy correspond to proposals submitted in August by the ISR Label Committee, responsible for its governance, certain promoters of the sustainable investment feared a limited reform in order, in particular, to avoid exclusion of the ISR funds of TotalEnergies, the French oil and gas “major”, heavyweight on the Paris Stock Exchange with a capitalization of nearly 150 billion euros .

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On October 30, around sixty organizations and personalities co-signed a letter to the Prime Minister, Elisabeth Borne, to express their fear of“lower arbitration” and of “the institutionalization of greenwashing”.

Launched in 2016, the ISR label is now affixed to some 1,200 investment funds representing a total ets of 773 billion euros, but it has aged poorly: as of December 2020, a report from the General Inspectorate of Finance (IGF) had severely criticized him, evoking “intrinsic weaknesses” And “a confused promise” made to the saver to conclude that unless they evolve “radically”the label was exposed to “an inevitable loss of credibility and relevance”.

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