Anti-Greenwashing Rules Come to Europe
This week, we talk about new European anti-greenwashing rules for investments and how the Chinese stock market has entered correction territory.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends!
Hi, Maitane! Some new European anti-greenwashing regulations could change the way tens of millions of retail investors look at the firms that manage their money. Greenwashing is exaggerating or misrepresenting a product's environmental benefits.
The regulations began to take effect today. In 2023, large investment houses will eventually need to share how their investments in companies could affect 18 sustainability metrics.
Each metric offers a snapshot of how an investment firm’s overall portfolio affects a specific issue. Metrics include the gender pay gap and greenhouse-gas emissions.
The rules reach beyond Europe: They also apply to international investment companies that manage money in the European Union.
Fund managers say the rules are already having an effect outside of the bloc. Since Europe has more sustainability regulation, American and Asian regulators could use the rules as a basis.
That could help harmonize sustainability standards across the globe, which have so far varied widely. Now let’s turn our attention to some potentially troubling news out of the Chinese stock market.
Chinese stocks retreated recently as investors fear policymakers could increase borrowing costs to prevent a bubble from forming. After a stellar performance last year, the CSI Index, which tracks the 300 biggest companies listed in mainland China, has fallen more than 13% from its most recent peak on Feb. 10, entering what is called “correction territory.”
Stock-market analysts use the term to describe when a major index falls by more than 10% from its most recent peak. Such a decline could hit 401(k)s and other investments, but economy experts say corrections are quite common in the market cycle and aren’t always bad.
And investors can actually take advantage of these declines to buy some of the most expensive stocks at discounted prices. One way to minimize losses as a result of a correction is to have a diversified portfolio by selecting a mix of investments.
The stocks leading the decline include alcoholic-beverage makers Kweichow Moutai and Wuliangye Yibin and electronics manufacturer Midea Group. Kweichow and Wuliangye, which are part of the index, are both down more than 20% since Feb 10.
What am I looking at? The chart above shows the performance year-to-date of the CSI 300, an index of the top 300 stocks listed on the Shanghai and Shenzhen stock exchanges in China.
Interesting! We’ll keep an eye on the stock market and China’s economy in 2021.
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Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music and skateboarding (but I suck). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardonmaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy