Testing draft EU ecolabel criteria on UCITS equity funds : executive summary

The objective of this study is to support the work of the European Commission services involved in developing EU Ecolabel criteria for financial products. In particular, the study serves as a test run for the draft Criterion I" Investment in green economic activities" for UCITS equity funds of the upcoming EU Ecolabel for financial products. In this study, Draft Criterion I is tested on a sample of 101 "green" UCITS equity funds, domiciled in the EU27, of which (i) 51 are awarded with a national (eco)label (i.e. Austrian Ecolabel (Umweltzeichen), FNG-Siegel, Greenfin, Luxflag Climate Finance, Nordic Swan) and (ii) 50 are marketed as "green" but without a national (eco)label. Within the EU Action Plan on Financing Sustainable Growth, the European Commission decided to expand the reach of the EU Ecolabel to financial products in order to support transparency and consumer choice on environmentally sustainable retail products. Draft Criterion I builds on the EU Taxonomy. From the six environmental objectives to be covered under the EU Taxonomy, this study only assesses economic activities as regards their substantial contribution to climate change mitigation (i.e. the EU Taxonomy alignment). The testing requires an in-depth analysis of the economic activities of all underlying constituents of the "green" UCITS equity funds to understand whether their share of "green" revenue is sufficient in order to qualify the fund for the EU Ecolabel by satisfying the thresholds as set out by the Draft Criterion I. As specified in the tender , this study tests whether the draft Criterion I "Investment in green economic activities" of the upcoming EU Ecolabel for financial products (Draft Criterion I) is applicable to marketed UCITS equity funds. This involves the identification of methodological challenges, data availability gaps, and deriving suggestions for the next steps regarding the development of the EU Ecolabel.