Investigations into DWS were triggered by complaints from the firm’s former head of sustainability, Desiree Fixler. She said last year that DWS’s claims that hundreds of billions of its assets under management were “ESG integrated” were misleading because the label didn’t translate into meaningful action by relevant fund managers. DWS has since stopped using the label.
Ophele warned that national regulators have different interpretations of SFDR and suggested that some local watchdogs aren’t policing ESG claims properly.
“SFDR doesn’t provide for any harmonization in the European fund landscape,” Ophele said. “And it’s fair to say that every national competent authority is implementing its own approach, if any.”
The lack of clear rules is making asset managers all the more nervous. “You have the regulators trying to carve out a vague description of what constitutes an ESG product,” Beslik said.
Ophele said there is now a clear understanding that the “current situation isn’t sustainable.”
The chair of the European Securities and Markets Authority, Verena Ross, acknowledged this week that SFDR is “incomplete and imperfect.”
In March, European authorities issued more guidelines, and the European Commission is considering minimum sustainability requirements for Article 8 funds.
SFDR “has been perceived by many to be a bit toothless,” said Beslik. But with DWS, “regulators have decided to set a precedent.”
This article was provided by Bloomberg News.