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.

Identified Concerns

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 institutional investors.

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.

Why Policymakers Should Act

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 become mainstream.

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:

  • the decision of a retail customer to open an account and deposit money with a credit institution;
    the lending of the money deposited to new green projects and economic activities, and;
  • the payment of interest and the reporting of the associated environmental benefits to the account holder

In particular, JRC sets three requirements that allow for the earmarking of green loans and traceability of the link between each retail customer’s deposited money and their contribution to the total value of the green loans granted:

  • Green loan to deposit ratio: At least 70% of the value of the total deposits shall be used to make green loans and/or to invest in green bonds
  • Green loans made using the deposited money: Loans contributing to the green loan to deposit ratio shall only be granted to green economic activities
  • Internal ring fencing of the deposited money: The money held in deposit and granted as loans shall be strictly ring fenced within the accounts of the Credit Institution