The vast majority of the world’s largest financial groups have opposed or pushed back against more stringent measures on sustainable finance.
According to a report by non-profit organisation InfluenceMap, only 5% of 63 biggest financial groups are strategically supporting sustainable finance policy of the European Commission.
It also found that 19 out of 20 industry lobby groups are standing in the way of an ambitious outcome of the sustainable policy.
The report comes at a time when the European Commission is committing to a Renewed Sustainable Finance Strategy, which will factor in the European Green Deal, Covid-19 recovery and will build on the existing EU action plan on sustainable finance.
InfluenceMap singled out BNP Paribas, Aviva and Groupe BPCE as being actively engaged in promoting progressive sustainable finance policy.
The think tank said the three asset managers have all been consistent in their support for key sustainable finance policies and have gone beyond high-level supportive statements to engage on regulations in detail.
All three have been members of one of the European Commission’s expert groups, as representatives of Aviva Investors and Mirova were on the HLEG (high-level expert group) and representatives of BNP Paribas Asset Management and Mirova were on the TEG (technical expert group).
InfluenceMap added that all three are also active in promoting and supporting policies in the media.
It highlighted Aviva as being an advocated for regulation on sustainable finance since at least 2014. It added that it was regularly putting out position papers with policy suggestions, many of which have since been taken up by the European Commission.
The asset manager was also vocal in its support for clarifying that fiduciary duty should cover ESG issues and for policies to mandate engagement with clients and beneficiaries about their ESG preferences and was also supportive of the creation of an EU Green Bond Standard.
Aside from the three frontrunners, InfluenceMap also highlighted that Legal & General, Nordea, Rabobank, Unipol and Aegon have taken supportive position but don’t appear to be as strategically engaged.
Lack of tangible engagement
Aside from praising those that are strategically engaged with the future regulation, InfluenceMap said BlackRock, BNY Mellon, Invesco and UBS had pushed against more stringent regulations on sustainable finance in Europe.
‘These groups have tended towards arguing in favour of policy focused on transparency rather than regulatory mandates for the financial sector.
‘The positions of these financial institutions most closely resemble the positions of finance sector industry associations, discussed in the next section. Within this group, BlackRock appears to be the most strategically engaged,’ InfluenceMap said.
Giving BlacRock as an example, InfluenceMap said the firm stated broad support for the taxonomy while arguing for a less rigorous approach based on facilitating investor choice over strict science-based thresholds
The report highlighted that BlackRock argued against the creation of green labels at the EU level in 2017 and has since pushed for a weaker approach to the EU’s Ecolabel. For example, it argued for unambitious thresholds of 25% green activities to be considered green at portfolio or company level in January 2019.
InfluenceMap said the asset manager opposed updating fiduciary duties to include ESG issues in 2017 and since has argued for a weaker approach to related updates to MiFID II to integrate ESG preferences into the advice investment firms give to clients.
Misalignment of industry bodies
InfluenceMap also said the financial sector’s industry associations are misaligned from most of their members on EU sustainable finance policy.
According to the think tank, European Fund and Asset Management Association (Efama), Association for Financial Markets in Europe (AFME), European Banking Federation (EBF) and PensionsEurope have intevened to weaken and delay proposed EU legislation.
In addition the report highlighted that groups such as BusinessEurope and EuropeanIssuers have been highly engaged on the taxonomy and the non-financial reporting directive to resist requirements on investee companies.
Sector-specific groups, including the International Association of Oil and Gas Producers (IOGP) and FuelsEurope, have lobbied to weaken specific ‘green’ thresholds to include their sector’s activities.
The InfluenceMap report covered 75 financial companies belonging to 63 of the largest financial institutions in Europe, 12 finance sector industry associations and eight corporate industry associations.
It drew on its established methodology for assessing corporate influence on key policy areas, scoring over 2,000 evidence pieces across the 83 entities involved to derive metrics indicative of policy engagement behaviour towards sustainable finance policy.