Towards a coherent legal framework for sustainable collective investment funds in the EU

Abstract:Individuals and institutions, such as insurance companies and pension funds, invest money to pursue various investment objectives, including, since recently, the desire to align portfolios with sustainability interests. As a result, sustainable funds have gained mainstream appeal, with asset under management surpassing two trillion euros in Europe. Funds are vehicles created by asset managers to pool money from various investors to achieve specific investment objectives. Sustainable funds are distinct in that they complement traditional financial metrics with the consideration of new issues such as climate change, biodiversity collapse and social justice, when making investment decisions. Certain fund-specific sustainable finance regulations, such as the European Social Entrepreneurship Fund (EuSEF) Regulation and the European Long-term Investment Fund (Eltif) Regulation, have been in place before broader sustainable finance regulations were adopted or proposed, such as the Taxonomy Regulation, the Sustainable Finance Disclosure Regulation, and the (proposed) EU Ecolabel. As a result, the legal framework governing sustainable funds forms a complex ecosystem of directives and regulations, each with distinct legislative origins and objectives. The interplay between these legal frameworks remains unclear. The first two parts of this PhD thesis map the different regulatory frameworks with the objective to understand how they rationally relate to each other and how those frameworks rationally relate to the EU's objective to reorient private capital flows towards sustainable investments. To assess whether a "rational relationship" exists, I developed a visualisation for each substantive/thematic part of the regulatory framework, which allowed me to "build up the picture". Such visualisation clearly showed how different layers of sustainability classifications in EU law interact. I concluded after each visualisation how one framework covering a shade of sustainability rationally relates to another (deductive coherence) and to the principles underlying the regulatory framework (deliberative coherence). The third part explains the interaction between the legal frameworks and private labels; the final two parts explain the interaction with the regulations governing marketing and distribution. Finally, the thesis puts forth ten policy recommendations to improve coherence in a way that also advances investor protection, market integrity and efficiency.

Publication year:2025

Accessibility:Embargoed