The European Commission is wrong to state that asset managers do not systematically consider sustainability in their investment processes, according to the European Fund and Asset Management Association (EFAMA).

Commenting on the release of the Commission’s action plan on sustainable finance today, the association said it disagreed with action plan statements asserting this.

The Commission stated in its full action plan document: “Evidence suggests that institutional investors and asset managers still do not systematically consider sustainability factors and risks in the investment process.”

According to EFAMA, however, evidence suggested that integration of sustainability factors had increased in the market over recent years.

Asset managers had embraced sustainability as an integral part of the investment process and were supporting the development of responsible investment “in all of its forms”, it said.

The Brussels-based association also came out against the Commission’s plan to table a legislative proposal to clarify investors’ duties with regard to sustainability.

In its view, such a legislative initiative was not necessary for two reasons.

“An EU agenda on sustainable finance should focus on a market-driven approach and avoid creating any unintended barriers to market development”


“Firstly, consideration of sustainability objectives in investment decision-making or the investment in ‘sustainable’ projects, products or companies has to be driven by those making asset allocation decisions, i.e. asset owners,” said EFAMA.

Asset managers could not create “‘sustainable’” products that did not respond or accommodate asset owners’ financial and “impact” objectives, it added.

Secondly, approaches to sustainability evolved over time because they were linked to economic activities and associated with innovation and behaviours, EFAMA said.

The materiality of environmental, social and governance (ESG) factors depended on economic policy, it added.

“Any mandatory sustainability requirement, especially regarding investments, would turn ESG into a ‘tick the box’ compliance exercise,” EFAMA warned.

The association was supportive of the overall direction of the action plan, however, and welcomed elements such as the plan to strengthen reporting on sustainability and develop an EU classification of sustainable activities.

The Commission should carefully consider the means of facilitating ESG investment, with strengthening choice and transparency being more beneficial than a prescriptive legislative approach, the association said.

“EFAMA believes that an EU agenda on sustainable finance should focus on a market-driven approach and avoid creating any unintended barriers to market development,” it said. “This is crucial, given the constant evolution of products, practices and end-investor demands. Any legislative initiatives need to be reviewed carefully to ensure that positive market-led trends continue to thrive.”

The fear of a “prescriptive” approach echoed concerns expressed by PensionsEurope in response to the final report from the High Level Expert Group (HLEG) that advised the Commission.