A tool has been launched to help asset owners and asset managers prepare for how their portfolios or investment products could look under the forthcoming European Union system for defining what economic activities count as environmentally sustainable.
Developed by Impact-Cubed, the tool is intended to give investors the insight they need to anticipate and avoid having funds or portfolios labelled as amounting to “greenwashing”.
One of the European Commission’s aims for the regulation for the so-called taxonomy, or “green list”, is for it to curb misleading marketing.
Under the regulation, funds and pension products marketed as green or sustainable will need to back this up by reference to the taxonomy, and those that do not will have to make an explicit statement about this in a sort of disclaimer.
The taxonomy is to be developed through delegated acts, with the first due to be adopted by the European Commission by the end of 2020 and to start applying as of the end of 2021.
Antti Savilaakso, research advisor at Impact-Cubed, said: “We anticipate asset managers and asset owners alike to want to get an early insight into what their own portfolios will look like through [the EU green taxonomy] lens and be able to start preparing for the disclosure requirements.
“There is a risk for many investors that their funds could be labelled as ‘greenwash’ if they fall outside what EU regulators define as sustainable. That is why this new pre-screening service, or greenwash checker, will be an important tool for many investors.”
Arleta Majoch, product specialist at Impact-Cubed, said the tool would help investors anticipate how their portfolio would look under the taxonomy framework.
“It can help them prepare for in what light their approach could be cast if it’s not fully captured, and to help them start thinking about their own messaging, about reclaiming the narrative,” she told IPE.
According to Impact-Cubed, the tool provides complete coverage of listed markets as well as private assets. It is thought to be the first of its kind to come to market, with other providers having products in development.
Impact-Cubed is the company behind a portfolio impact assessment model that has been used by institutional investors such as the Church of Finland.
The European Parliament and European Council reached a political agreement on the taxonomy regulation on 18 December.
The technical expert group (TEG) on sustainble finance is understood to be due to publish taxonomy implementation guidance next month. Recommendations from TEG are to be the first input into the Commission’s work on developing the delegated acts.