Ecolabels: On the Money? A Policy Evaluation of Eco-labels for Retail Investment Products in the EU

Sammanfattning: To catalyse transition toward a more sustainable economy, the European Union is proposing several policy interventions within the regulatory framework governing the financial sector. As part of this effort, a new EU Eco-label policy for green investment funds seeks to (i) facilitate individual investor participation in the sustainable investment market and (ii) increase private sector investments in sustainable assets. Using a program theory evaluation, this thesis analysed the efficacy and legitimacy of eco-labels for investment products to achieve the stated policy goals. Through a qualitative content analysis (QCA) and expert interviews (n= 13) this thesis examined the experience of existing labels in the EU, and potential challenges and opportunities that might present for effective eco-label implementation in the context of investment products. The resulting analysis revealed that (i) eco-labels can be effective means to facilitate certain sustainable investment activities such as critical mass positioning, individual positioning and market signalling, but (ii) a label’s potential to trigger positive outcomes may be limited by trade-offs between aspects of the label’s design and its acceptability among market actors. As more sustainable finance policies emerge in the EU, considerations related to harmonizing environmental impact measurement and reporting practices among all actors in the investment chain will be critical if they are to be both relevant to the financial industry and drive the market towards positive environmental impacts.