Revision of the SRI label to make it more selective

Created in 2016 to distinguish funds working in favor of socially responsible investment, the SRI label has been a great success with the public. However, abuses and attempts at manipulation by certain managers have tarnished its reputation. Critics pushed Bercy to reform this label by early 2023.

The SRI label is supposed to 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.

In 2022, there are more than 1,000 SRI-labelled funds. Several activists note that SRI investments do not always meet the ESG criteria, which are essential for obtaining the mark. Some materials contain titles of companies operating in questionable sectors, such as:

  • Fossil energies ;
  • Armament;
  • Nuclear.

The current overhaul 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 label will be completed at the beginning of next year, according to Bercy’s plans. The new standard for distinguishing responsible financial investment is gradually being revealed, according to the proposals announced by the actors involved in the process. If the current trend continues, some funds that are already labeled could lose their certification if they do not upgrade their portfolio. In order to encourage these operators, those involved in the new certification have published the main orientations of the future reference system. Some new features mark a radical shift compared to the 2016 version.

This is particularly the case of the carbon trajectory, an index that the funds will have to display in the future.

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

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

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

According to advocates of the reform, these new developments will lead managers, promoters and intermediaries to progress and improve their procedures.

Improve the visibility of responsible investments

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

ImportantLast May, Fintech Epsor estimated that 80% of funds holding 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 societal commitment. These same criticisms have already been made by the General Inspectorate of Finance in 2021. In its report, the IGF points out the lack of credibility of the SRI label, who would be content to analyze fund management processes instead of closely scrutinizing their content.

Because of these shortcomings, several funds slip through the cracks and use their labeling to show themselves to be more responsible than they really are. Some brands have used the label for greenwashing or greenwashing purposes. If all goes according to the government’s plans, these practices should cease after the remodeling of the SRI label.

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