FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, March 6, 2019. REUTERS/Yves Herman/File Photo BRUSSELS (Reuters) - The European Union agreed on Thursday on a new law that forces asset managers, insurers and pension funds to disclose environmental risks in their investments. The law is meant to spur green investment and to curb “greenwashing”, a practice whereby companies claim to be more environmentally friendly than they really are. The agreement reached by EU governments and EU lawmakers will also introduce transparency requirements on the social consequences of investment decisions. “The EU is today setting out a transparency framework to make sure that investors are well informed of the environmental and social impact of their investments,” said Eugen Teodorovici, Minister of Finance for Romania, which currently holds the EU presidency. The new law, which now needs a few final procedural steps before it can enter into force, sets uniform rules on how financial firms should inform investors about environmental and social risks and opportunities linked to investments. Financial managers will have to disclose, for instance, investments in assets that could pollute water or damage bio-diversity. The new rules are part of a package of measures meant to help the EU to achieve its targets in countering global warming, for which the commission has estimated that 180 billion euros ($203.4 billion) a year in additional investment will be needed for the next two decades. As part of this package, EU states and lawmakers are also negotiating a legal text to establish a unified EU classification system of sustainable economic activities which would set out the criteria for labeling investments as “green”. Reporting by Francesco Guarascio; Editing by Raissa Kasolowsky
The European Union ( EU ) has agreed a new law that requires asset managers , banks and pension funds to disclose the environmental risks contained in investments , as part of moves to counter “ greenwashing ” . The law will also introduce transparency requirements relating to the social impact of investment decisions . The rule is part of a wider package designed to help the EU achieve investment targets that it estimates will require an additional investment of $ 203.4bn a year for the next two decades . EU states are also currently negotiating a legal text setting out a unified classification system of sustainable economic activities .