EU agrees on new rules that force companies to disclose environmental risks in their investments

The European Union agreed on Thursday on a new law that forces investors to disclose environmental risks in their investments, according to Reuters.

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 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, the Romanian Minister of Finance.

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 EUR 180 billion a year in additional investment will be needed for the next two decades.