Updated: October 2020
ESBG fully supports the development of a voluntary label to increase transparency for consumers on
sustainability. However, regulators should firstly observe market developments and make sure that an EU
standard will not complicate future harmonisation. It is also important that such a label underpins an effective
transition of the economy to a carbon-neutral society and sustainable development. Therefore, labels should
not only apply to products that are strictly low-carbon but also support transition and enabling activities to
promote a faster, broader, and more effective transition. Both low carbon activities, transition, and enabling
activities should be included in the scope of the EU ecolabel.
With regards to the traceability of green deposits, an alternative solution of the current proposal of ring-fencing
with similar outcome could be to trace the use of the assets a bank receives from the green deposits by
ensuring that the right proposition of the assets coming from deposits are used to finance ecolabelled
projects. It appears increasingly likely that banks will have to trace their green lending for risk reasons in the
EU, by “tagging” the assets they finance.
Our main concerns are the asset classes that can be labelled, and the reality-check applied to the thresholds
defined for each asset class. The ambition of the ecolabel should be maintained as high as possible, but also
adapted to the asset class considered, and taken into account when defining the thresholds of green for each
type of fund. ESBG is in favour of a label that is both environmentally ambitious and realistic, to ensure that
thanks to the label, more and more dedicated green investment strategies will be developed for retail and
Another important question is the way the EU Taxonomy will be integrated in the EU ecolabel: the level of
granularity of information that can be obtained from corporate issuers and banking clients is most of the time
not adapted to the technical requirements (criteria, metrics) listed in the EU taxonomy. An example:
the technical screening criteria for all environmental objectives will be ready by 31 December 2022. However,
the EU Ecolabel for financial products is expected to be adopted in autumn 2021. It is not clear how the EC
will ensure the alignment.
Moreover, we are concerned about the correct way of tracing the use of green deposits. The current proposal
of the Commission refers to the option of “ring-fencing” green deposits. However, this option could cause a
balance sheet burden for banks as well create regulatory issues relating to complying with liquidity requirements.
Building on the EU taxonomy, EU standards and labels for sustainable financial products would
protect the integrity of and trust in the sustainable financial market, as well as enable easier
access for investors seeking those products. An EU standard accessible to market participants
would facilitate channelling more investments into green projects and would constitute a basis
for the development of reliable labelling of financial products. Labelling schemes can be
particularly useful for retail investors who would like to express their investment preferences on
sustainable activities. However, the lack of labelled financial products may prevent investors
from directly channelling their funds into sustainable investments.
Moving on to the traceability of green deposits, the idea of ring-fencing sounds right at first sight,
but it could at minimum complicate the debate and the hopes many have on making it work and
A smart Ecolabel scheme, which takes into account the considerations above and below,
will certainly be of added value to the EU’s financial system.
The development of the EU Ecolabel for Financial Products is based on the European Commission’s 2018
Sustainable Finance Action Plan. The EU Ecolabel is a voluntary scheme that provides producers with an
opportunity to market their products or services with a label of environmental excellence, provided that they
fulfil the criteria on environmental performance.
In December 2019, the Commission’s Joint Research Centre (JRC) published its 2nd technical report on the
ecolabel for retail financial products, with a draft proposal on the scope and criteria for granting an ecolabel
to such products within the EU.
While the initial focus of proposals for an EU Ecolabel for retail financial products has been on investment
products subject to the PRIIPs regulation (equity, fixed income and hybrid funds, including UCITS and AIMs;
as well as IBIPs), the scope has now been extended to include savings deposit and fixed-term deposit accounts.
According to the proposal, in order to award the EU Ecolabel to the service of managing a deposit account,
the link must be established between: