French regulator stresses lack of transparency in SRI funds information

The Autorité des Marchés Financiers (AMF) has published a report reviewing socially responsible investment (SRI) in the French collective management industry.

This report highlights lack of transparency in the documents issued by asset managers for SRI funds marketed in France.

AMF has identified 409 French and non-French funds promoting themselves as SRI at end-2013 but its review has focused on a sample of 100 open-ended funds representing €44bn under management (on a total of €81bn).

In its review, AMF observes regulatory documents and marketing materials for SRI funds marketed in France “vary considerably” in qualitative terms. The French market regulator assesses investors are not always given enough information to be able to grasp the full meaning of SRI.

AMF has found out that in 3% of funds analysed, the product is listed as belonging to the producer’s family of SRI or equivalent funds but this characteristic is not referenced in the legal documentation.

For some 18% of the funds reviewed , the fund states that there is a responsible investment policy but the legal documentation provides no information on the nature of the non-financial criteria used.

In 40% of cases, SRI funds documents point out there is a responsible investment policy and that the legal documentation does provide information on the nature of the non-financial criteria used, but this information gives very few details, AMF said.

AMF reports that for 13% of the funds it analysed, the information on the nature of the non-financial criteria is highly detailed but the approach used is not defined (exclusion, weighting, etc.).

Lastly, for 26% of the funds, the information on the investment policy and non-financial criteria is provided in the legal documentation.

AMF has then decided to further adjust its policy in order to bolster the information to be included in the legal documentation and marketing materials for collective investment schemes; the consistency, accessibility, reliability and clarity of all the information made available to investors.

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