There is a widespread perception that sustainability and Climate Change does not concern all businesses because they do not affect the environment, or they have no carbon emissions, or their activities are low-impact because they do not fall within areas of climate change concern, and other arguments. This perception leads to complacency or postponement of actions related to Environment and Climate Change measures. But gradually, more and more issues are becoming of environmental interest from different perspectives. We present a case of how, through a European Union regulation, a new need to comply with environmental measures and compliance procedures are being introduced .
The case is about the Green Funds and it does not only concern the financial product itself but extends to any business that would like or is considering joining a Green Funding Model.
Green investment funds aim to achieve financial returns returns by promoting environmental sustainability and addressing Climate Change.
Green Funds are investment funds or financial products that create, manage and promote on the relevant markets (e.g. mutual funds) environmentally sustainable investments or companies that have a positive impact on the environment and thus on the climate. Their purpose is to generate a profit for investors while promoting environmental sustainability and addressing Climate Change issues and problems.
These funds may invest in companies offering solutions for carbon reduction, sustainable energy, recycling, green technology and other similar areas. They may also assess companies according to environmental criteria and exclude investments in companies that operate in a harmful way for the environment, such as those that contribute to increasing greenhouse gas emissions.
Green Funds are a way for investors to support initiatives that aim to reduce the human impact on the environment while seeking financial returns.
European legislation imposes rules to ensure transparency, the evaluation of Green Investment Products and the protection of investors.
European legislation imposes rules on these funds to ensure transparency, to assess the environmental impact of their investments and to protect investors.
Through regulation, the green rules set criteria for what is considered "green" in an investment. This helps avoid "greenwashing" where a company or project is promoted as environmentally friendly without actually being so.
In addition, the legislation promotes transparency by requiring funds to clearly report on how they select, evaluate and manage their environmental investments. This gives investors more confidence and information about how their money is managed, while protecting the environment.
Regulation (EU) 2019/2088, also known as the Sustainable Finance Disclosure Regulation (SFDR), is a legislative intervention of the European Union that sets standards for the ongoing reporting and publication of information related to the sustainable dimension of financial investment products.
The purpose of the SFDR is to ensure that investors have the opportunity to receive comprehensive information on how the investment products in which they may invest their capital take into account environmental and social factors. This contributes to market transparency and avoids misleading investors about the sustainable performance of their investments. The Regulation includes detailed guidelines on the content and presentation of information on sustainability indicators, adverse sustainability impacts and sustainable investment objectives in various pre-contractual documents and updates as well as in reports concerning the companies managing these products.
This regulation contributes to the promotion of sustainable financial activity and the development of a transparent approach to these investments and the assessment of their environmental and social impact.
So gradually, sustainability and climate change issues will affect to a significant extent ALL businesses in one way or another, either during their operations, during their financing efforts or at other stages.
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