In financing of the sustainable transformation, the fund industry plays a key role as a significant capital-raising source. However, the lack of standards for investments that can be considered sustainable in terms of EU regulation leads to uncertainty in the market. The BVI is calling for clear criteria. Despite these missing definitions, ESMA is planning guidelines for ESG or sustainability-related additions to fund names, which may include thresholds for sustainable investments.


The EU is aiming for a climate neutral economy by 2050 and wants to support sustainable economic sectors and production processes by directing capital flows into corresponding activities. The fund industry, as a significant capital-raising source is happy to play a key role in this endeavour. Asset managers have a longstanding track record of financing sustainable projects and companies. As early as 2012, the BVI introduced its "Guidelines for Responsible Investment”.

Although the EU legislators have adopted a flood of detailed regulations, they have not yet established universally accepted definitions of what is considered sustainable. The Sustainable Finance Disclosure Regulation (SFDR) sets out only transparency obligations, and the taxonomy is still in its infancy. Fund providers can therefore so far only be measured against their own sustainability commitments.

The lack of definitions and standards not only leads to misunderstandings, but also increases the risk of greenwashing. The ESAs now want to tackle greenwashing. We welcome this efforts. However, in view of the many open questions on the interpretation of the EU regulation, the current focus on a broad market investigation into suspected cases is, in our view, too early. Before talking about suspected cases, it is necessary to clarify essential concepts of the SFDR, especially the criteria for sustainable investments. In addition, EU legislators should oblige ESG rating providers to disclose their methods and data procurement processes. Fund companies would then be in a better position to assess the quality of ESG ratings.

ESMA also wants to tackle potential greenwashing with guidelines for fund names using ESG or sustainability related terms. The guidelines are intended to prevent misleading fund names. For the use of the terms ’ESG’, ’sustainable’ and ’impact’, ESMA proposes various thresholds of sustainable investments as well as mandatory exclusion criteria. We have commented on this in the context of the consultation.

Since August 2022, investment advisors have to ask their clients about their sustainability preferences and offer suitable products. For this purpose, product features are mandatory for funds with sustainability features (according to Articles 8 and 9 of the SFDR). However, the lack of details and standards hinders the advice. Therefore, the BVI and the German Banking Industry and Derivatives Associations have developed a joint target market concept for sustainable financial products. The concept provides a reliable minimum standard for the German market which is by date unique in Europe.

Nevertheless, there is much room for interpretation remaining, due to the lack of regulatory guidelines. Among others, determining the minimum share of sustainable and taxonomy-aligned investments at fund level proves to be difficult, as there are no binding and consistent calculation methods. This may result in products pursuing a similar investment strategy whilst reporting significantly different shares of sustainable investments.

The ongoing uncertainty about the interpretation of EU regulation also affects the product level. Fund providers have therefore downgraded more than 20 percent of their funds under Article 9 of the SFDR to the Article 8 product category in the second half of 2022. At the same time, however, sustainability features were added to every tenth fund previously classified as non-sustainable. As a result, around 6,000 retail funds resp. share classes with sustainability features are now available in Germany. At the end of 2022, fund companies in Germany managed a total of EUR 739 billion in retail funds and Spezialfonds with sustainability features. This is an increase of 12 percent compared to December 2021.



Sustainability, Rating Regulation

BVI’s core positions on the proposed EU Regulation on ESG Ratings




BVI’s comments on the draft ESRS Delegated Act published by the EU Commission on 9 June 2023




BVI’s response to the ESAs’ Joint Consultation Paper on the review of SFDR Delegated Regulation regarding PAI and financial product disclosures


BVI's positions from A-Z

Member area

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