Financial literacy ‘sidelined’ from EC’s sustainable finance consultation – EFAMA

Written by Natalie Tuck

09/04/2020

Financial literacy and promoting sustainability awareness are “somewhat sidelined” in a consultation on the Renewed Sustainable Finance Strategy released by the European Commission.

This is the initial view of the European Fund and Asset Management Association (EFAMA), to the consultation that was released yesterday, 8 April. The commission said the consultation is an integral part of the European Green Deal and its overall efforts to ensure a sustainable and resilient economic recovery following the coronavirus outbreak.

The aim of the consultation is to “collect as many views as possible to feed into the commission's work to help mobilise private investment in sustainable projects”. However, EFAMA said that “financial literacy and promoting sustainability awareness are somewhat sidelined in the consultation, despite being key for unleashing the full potential of sustainable finance”.

“While asset managers play an important role in providing investors with the information they need to make informed decisions, ultimately it is the investor who makes investment decisions,” the association stressed.

Within its consultation, the commission said the ongoing coronavirus outbreak highlights the critical need to strengthen the sustainability and resilience of our economies in the future.
This was welcomed by EFAMA director general, Tanguy van de Werve, who said: “We agree that the current COVID-19 crisis underlines the need to strengthen the sustainability and resilience of our societies.

“For that, the sustainable finance strategy needs to carefully consider the impact the pandemic crisis has on our society and economies and the financing needs it will create. We need a balanced transition that allows appropriate distribution of resources across the different sectors. We cannot afford leaving behind part of the economy or of society.”

EFAMA noted that while it is crucial to focus on the environment, most corporates are now in survival mode and will most likely be for quite a while. Therefore, looking at the current situation globally, it may prove necessary to increase the focus on the ‘S’ factor, in particularly human capital and societal imbalances.

“The virus outbreak has exposed the flaws in our societal systems and will likely exacerbate the divide further, with more job cuts especially at the low-skilled and low-pay end of the market,” EFAMA said.

It also questioned whether now is the right time to dedicate a lot of efforts on the ‘G’ factor, especially given the existence of corporate governance and stewardship codes. In addition, the revised Shareholder Rights Directive is still to be duly implemented in a number of member states, it said.

(This article first appeared on our sister title www.europeanpensions.net).

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