The Luxembourg Bankers' Association (Association des Banques et Banquiers Luxembourg - ABBL) has responded to the recent "mystery climate shopping" report issued by Greenpeace Luxembourg.
The ABBL stated that, "in a context where all stakeholders must intensify their efforts in terms of education in order to promote the development of sustainable finance", it regretted Greenpeace's report, arguing that it caused more confusion by focusing solely on the implementation of the Paris Agreements, which "does not correspond to the regulatory requirements to which asset managers and banks are subject".
"The result is an inevitable disconnect between the results of the study and reality", the ABBL continued, arguing that Greenpeace's claims of greenwashing were unfounded. "At a time when it is essential that investors' savings are channelled into sustainable investments, it is regrettable that Greenpeace is talking about greenwashing where there is none, thereby undermining public confidence".
The ABBL also noted that banks are offering numerous investment products that fully comply with the requirements of European regulations, which are "complex and still evolving". The association added that the ABBL and its members are "doing their utmost to serve the cause of sustainable development by promoting both training for bank advisors and raising public awareness of the positive impacts that investments in sustainable finance can have".
"Most people recognise the power of finance to play an important role in the ecological and societal transformations the world is facing. Interest in sustainable finance is growing, but many people still have difficulty understanding the subject, which remains quite complex", underlined Catherine Bourin, member of the ABBL Executive Committee and Secretary of the ABBL Foundation for Financial Education, referring to the results of a general public survey recently conducted jointly by the ABBL Foundation, the CSSF (Luxembourg's financial regulator) and the Luxembourg Sustainable Finance Initiative (LSFI).
The ABBL added that it welcomed "any initiative that makes it possible to take stock of knowledge and practices in the field of sustainable finance". Nevertheless, according to Julien Froumouth, sustainable finance advisor to the ABBL: "What is regrettable, however, is the methodology used in this study, which is not based on the precise definitions of the European regulations currently in place, such as the notion of client preferences in terms of sustainability, which goes well beyond purely climatic aspects".
"Yet it is this regulation that bankers are obliged to apply and to which they must refer in their discussions with their clients, as financial products specifically aligned with the Paris agreements only represent a very limited proportion of the sustainable investment universe", he continued. "Indeed, the data on the compatibility of corporate strategies with the Paris Agreement that banks need to develop these types of financial products is currently not available or is very limited".
According to the ABBL, the challenge for bank advisors to offer a product that corresponds exactly to the expectations of Greenpeace's mystery shoppers could therefore "only quickly lead to a dead end and to rather negative survey conclusions".
European regulation on sustainable finance has quickly advanced in recent years. The many discussions on the subject, which are still ongoing, show that it is a complex and wide-ranging topic, recalled the ABBL. New regulations have recently been put in place and other important legislation, such as the Corporate Sustainability Reporting Directive, are expected to play a key role in enabling access to and analysis of environmental, social and governance (ESG) data.
"Bankers, like their clients, are navigating a complex and still rather fluid landscape. If NGOs carry out analyses, they must do so on the basis of the implementation of European regulations, because it is on its application that banks and asset managers intend to be judged by their clients and their supervisory authorities", emphasised Catherine Bourin. "The results of the analysis could have been quite relevant if the basis of the work had been ESG products that comply with these regulations". The ABBL expressed its regret that "the fact that the same benchmark is not used adds to the confusion of the debate".
However, according to the association, all stakeholders are aware of the educational efforts that need to be made, whether at the level of financial sector professionals or consumers. "The ABBL is present on both fronts", said Catherine Bourin. "We have developed training programmes with the House of Training and are active in financial education via our Foundation". These training programmes are in addition to the initiatives carried out within the banks themselves or by other institutions such as the Luxembourg Stock Exchange (LuxSE), the CSSF and the LSFI.
Together with other key players in the financial sector, including the CSSF, the ABBL Foundation will carry out a number of nationwide initiatives in the coming months to raise awareness among Luxembourg residents of the challenges of sustainable finance, to equip them to make informed choices and to advise them about the various solutions through which they can mobilise their savings to invest in sustainable projects.