On September 28, 2021, the French Autorité de Marchés Financiers released the results of their qualitative study of the legibility of sustainable and responsible investment documentation. Over a period of seven days in June, the study queried ordinary, non-expert retail investors on how they understand responsible finance and sustainable investments, revealing a number of important trends in comprehension and the need for clearer communication.

Generally, the respondents had a vague knowledge of responsible investments as shown by a lack of clarity in their definitions of the concepts and distinctions. The lack of explanations, education and transparency were viewed as hindering investor choices. Investors expressed greater need for support, explanation and reassurance.

The study also assessed the participants feedback on self-directed research for responsible investments. Overall, the participants found the products difficult to find and perceived an imbalance between information on sustainability aspects and financial performance, the latter of which lacked clarity.

Moreover, the participants were asked to review the messages in the diverse information provided from the key investor information documents (KIIDs) and prospectuses, to performance reports. The non-expert participants found the regulated documents hard to read, discouraged by the “too technical/financial” language and provided only a partial understanding of sustainability, objectives and how the investments work. The report compiled a list of terms and language that required particular explanation and simplification.

The results reflected a certain level of investor mistrust and fear of greenwashing by the financial world, a lack of clarity on responsible finance and misunderstandings about performance and risks. This should prompt the industry to emphasise more education, explanation and transparency.