In late May, German justice conducted a search of the premises of Deutsche Bank and its subsidiary for the management of DWS funds in Frankfurt as part of an investigation into investment fraud. “Greener and more sustainable” than they really were. In its prospectuses, a financial institution would overestimate the share of its ESG investments, which is in fact little taken into account in the large number of investments made by management assets.
“The German example could inspire neighboring authorities and jurisdictions”
Is it worth worrying about the French financial sphere? It is clear that the legal framework governing stable funding is under development. But his goal has already been announced: the regulator wants to target green washthat can mislead investors. Difficulty? “Combating environmental risks is new to the finance market and related to the protection of savers and market integrity. Combating green laundering or environmental laundering is part of the same goal., explains Elodie Vallett, Bryan Cave partner Leighton Peisner. France has already made significant progress on this issue. It should be noted that France is a pioneer in CSR issues with its Sapen law 2, the Declaration of Non-Financial Results, its law of duty, the law of the pact, the law of climate and sustainability. The latter also integrated green wash in the field of deceptive commercial practice. The AMF has also defined CSR criteria that allow an economic player to be judged outside the usual financial criteria. “All these CSR tools pond now new tool for gmail communication for business, but also aa new source of responsibility for the latter “, developed by a lawyer. Financial players are not immune to temptation: informing about their CSR policies is important for their development.
The whole point is to find the right communication. When it comes to ESG or CSR commitments, the risks – reputational, market, regulatory fines – are high. However, says Elodie Vallett, “the boundary between communication is limited by what is actually introduced œwork on the CSR plan and green washing is minimal“. We can quickly turn to marketing abuse, and this is where we fall into deceptive commercial practices. So be careful because “Climate change lawsuits can also be filed against financial institutions“, warns the partner. So far, those who brought did not go further. Some financial institutions are involved in cases of fraudulent commercial practices, but not on the basis of green wash. But the world of finance must remain vigilant: “It is possible to imagine that these are inspections for compliance with environmental requirements develop well in practice, because regulators have become stakeholders in sustainable financing, including the fight against green washing “. The German example could inspire neighboring authorities and jurisdictions in France, the rest of Europe or abroad.
“Transparency in stable finance should be the key word for financial players”
Especially since on a European scale things are moving. The CSRD directive is expected in October, and implementation is planned for 2024. There is also a provision on taxonomy, which came into force in January last year, but with gradual application. For financial players, “It is difficult to know how all these rules will be combined“, says Elodie Vallett. What can businesses do to protect themselves? “Transparency in stable financing should be a key word for financial players. There is no miracle solution even if the criteria set out in the taxonomy regulation and its implications for the classification of sustainable investments – although they do not apply to all sectors of activity – are such that they can assess the sustainability of their approaches and thus avoid greenwashing. Companies continue to strengthen their legal and compliance departments, “but we always return to the same thing: since sustainable funding is in full development, we must wait for the following texts, their transposition and the evolution of the judiciary“.