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Some people on the Forum have drawn attention to the “Brussels effect” – how EU regulation on some issues, particularly concerning financial markets, tend to influence related standards over the world. Such effect may be relevant for AI Ethics; it will very likely be felt with EU Green New Deal, with impacts environmental regulation (e.g., deforestation-free supply chains), climate change (e.g., a tax on imports to prevent carbon leakage), and, more recently, animal welfare (also, this post).

The European Securities and Markets Authority (ESMA) recently issued a public consultation on the requirements for funds to use ESG-related words in their names. Their main proposal:

15. ESMA is seeking stakeholder feedback on the following proposals:

a. If a fund has any ESG-related words in its name, a minimum proportion of at least 80% of its investments should be used to meet the environmental or social characteristics or sustainable investment objectives in accordance with the binding elements of the investment strategy, as disclosed in Annexes II and III of SFDR Delegated Regulation.

b. If a fund has the word “sustainable” or any other term derived from the word “sustainable” in its name, it should allocate within the 80% of investments to “meet the characteristics/objectives” under sub-paragraph a) above at least 50% of minimum proportion of sustainable investments as defined by Article 2(17) 17 of Regulation (EU) 2019/2088 (SFDR) as disclosed in Annexes II and III of SFDR Delegated Regulation.

My question: the referred regulations do not mention animal welfare concerns. Will they do it soon? Even without any additions to the norm under consultation? Or should anyone propose that ESMA includes a reference on this subject?

The problem (so I see): “animal welfare” has recently become a requirement for corporate Sustainability reporting standards, after the approval of the so-called Corporate Sustainability Reporting Directive (CSRD) - Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Directive 2013/34/EU, as regards corporate sustainability reporting. This includes a Chapter 6a in Directive 2013/34/EU, with article 29b stating that: 

The sustainability reporting standards shall, taking into account the subject matter of a particular sustainability reporting standard:


c) specify the information that undertakings are to disclose about the following governance factor:


business ethics and corporate culture, including anti-corruption and anti-bribery, the protection of whistleblowers and animal welfare;

I'm no expert in EU policy, and I didn't investigate this thoroughly - hence the question. But I have some experience with financial supervision and regulation, and, as a rule of thumb, the more explicit you are (especially for new legal content), the better.

So, would it be helpful if someone send an opinion asking ESMA to add a paragraph to the future standard explicitly referring Directive 2013/34/EU?




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