Eurosif's Position on Retail Financial Services and SRI

In order to promote sustainable development across the EU, Eurosif believes that the Commission should foster the development of Responsible Investment among institutional investors. Environmental, Social and Governance (ESG) issues do affect the performance of companies. There is a growing consensus in the financial community that taking ESG issues into consideration is consistent with the fiduciary duty of investors when it impacts profitability, and is further relevant when there is a consensus to do so by participants /members /stakeholders. The introduction of an EU wide “ Statement of Investment Principles (SIPs)” for investments funds, as suggested in the European Parliament resolution of March 13 2007 on Corporate Social Responsibility (2006/2133(INI)) would ensure that Pension Fund trustees have to report on how they are taking those ESG risks into consideration. Ownership and power imply responsibility from investors and trustees.

The Commission should encourage a greater choice of investment options for consumers. In this respect, Eurosif believes that the Commission should foster the development of Sustainable and Responsible Investment, particularly by encouraging the development of SRI options in pension plans. A close attention to pension plans disclosure is also important.

Eurosif believes that the Commission should develop an optional legal EU-wide regime (“28th regime”) for savings. An EU-wide regime would offer greater saving choices and options for the final consumers, as it would create a bigger market for specific products (including SRI products) that otherwise would not be served, for lack of market volume.

For sustainable investment to be better understood, the Commission should consider ways to improve consumers’ financial literacy and capability. In order to do so, accountability to consumers must be increased and this can be achieved through greater transparency from retail financial services providers. In this respect, Eurosif wishes to put forward as an example the Eurosif Transparency Guidelines for the Retail SRI fund sector that it launched in November 2004, with the support of the Commission (DG EMPL). The guiding principle is that signatories to the guidelines should be open and honest and disclose accurate, adequate and timely information to enable stakeholders, in particular consumers, to understand the SRI policies and practices relating to the fund. To date, there are over 80 signatories of the transparency guidelines, representing more than 250 SRI funds (as of January 2011).

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Consultation on Packaged Retail Financial Products (PRIPs) (2010-2011)

On November 26, 2010, the EC  launched a consultation on the 'Packaged Retail Investment Products' (PRIPs) Initiative, which aims at raising standards of protection for retail customers. The consultation outlines possible measures for improving the transparency and comparability of investment products and ensuring that effective rules always govern the sales of retail investment products. It also addresses inconsistencies  in the standards that apply to different products and industry sectors. The replies will serve as an input for  the Commission when developing legislative proposals on transparency and sales for the products. 

Eurosif submitted a Response to this consulation, addressing issues such as: transparency and  the integration of environmental, social and governance (ESG) issues in retail investing and the  potential role of product labelling. In January 2011, Eurosif met EC representatives to discuss the consultation document and to voice  the EU investor community on the topics  addressed by the EC in the consultation, pertaining to  Sustainable and Responsible Investment (SRI). Please find below a summary of comments in Eurosif's Response:

• Eurosif strongly supports the development of a pre-contract document that includes the critical information needed for retail investment decision making (the so called “Key Investor Information Document” - KIID);
• Eurosif agrees that the successful model of the investor document created for the UCITS could serve as a strong basis for the creation of a PRIP KIID;
• Eurosif recommends the Commission to explore how the KIID could contain additional information pertaining to environmental, social and governance (ESG) aspects in addition to the elements proposed by the Commission in the consultation document;
• Labelling certain retail investment products as “green” or “ethical” must be done only after clear criteria, processes and definitions are set.

Download Eurosif Response to PRIP Consultation (PDF).

More information on the PRIP Consultation can be accessed at the following link.

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Green Paper on Retail Financial Services (2007)

In May 2007, the European Commission has set out, in the form of a Green Paper, its vision for future EU policy on retail financial services, which are financial products such as bank accounts, loans, mortgages, investments and insurance provided to individual consumers. The Green Paper aims to strengthen and deepen the Commission's understanding of the problems faced by consumers and industry in this area, to set out the Commission's overarching objectives and to highlight areas where more work may be needed.

The Commission seeks to develop integration in retail financial services markets in three main ways:

• First, the provision of products that meet consumers' needs, offering choice, value and quality, can be ensured through properly regulated open markets and strong competition.

• Second, European consumers need confidence to make the right choices. This can be achieved by ensuring that consumers are properly protected where appropriate, and that providers are financially sound and trustworthy.

• Third, consumer confidence in seeking out the best deals to meet their needs, regardless of the location of the financial services provider, can be promoted by empowering consumers to make the right decisions for their financial circumstances. Empowerment can be developed through financial literacy, clear, appropriate and timely information provision, high-quality advice and a level playing field between products perceived as having similar characteristics.

Stakeholders were invited to comment on the Green Paper by July 2007.

Eurosif attended the public hearing held in Brussels on September 19, 2007 to draw the conclusions of the consultation launched by this Green Paper and discuss with all stakeholders which initiatives are needed to bring about a more efficient internal market for retail financial services.. The EC received more than 190 responses to their green paper with a general consensus that retail financial services will remain local; however there remains a great need for harmonisation. All the responses (including Eurosif’s) and a summary are available on the Commission website. The results of the consultative process were later incorporated into the Single Market Review, published in November 2007.

The European Parliament released in July 2007 a white paper on financial services. The white paper included various amendments regarding SRI and SRI development; unfortunately these were taken off in the final voted version of the document.

For more information, you can access:

(Last Updated: January 2011)