A new pan-European environmental, social and governance (ESG) fund label has been launched by the Luxembourg body LuxFLAG as the Grand Duchy continues its focus on responsible investment.
The initiative, first reported by RI last year, aims to fill a gap in the European investment market and has the support of three European fund houses.
They are Paris-based OFI Asset Management, Nordic investment group Nordea and Sparinvest, the now Luxembourg-domiciled group that is backed by Danish institutional investors.
They have all committed to apply for the new label, launched by LuxFLAG (the Luxembourg Fund Labelling Agency), an independent body that is backed by the Grand Duchy’s finance authorities which currently labels microfinance and environmental funds.
The funds up for consideration are the OFI MultiSelect Europe SRI, the Nordea Emerging Stars Equity Fund and the Sparinvest SICAV – Ethical Global Value.
The label is available to UCITS and AIFMD funds domiciled in Europe or equivalent jurisdictions.
Funds are reviewed for inclusion by an eligibility committee which includes figures such as Ulrika Hasselgren of Sweden’s Ethix SRI Advisors and Hakan Lucius of the European Investment Bank (full list below).The criteria call for the funds to explain clearly how ESG criteria are integrated into the investment process. The fund also must have an exclusion policy and 100% of assets must be scrutinised against the ESG criteria. An external auditor has to be brought in to demonstrate compliance to the criteria.
“A new tool to encourage fund stakeholders to act responsibly”
Luxembourg’s Finance Minister Pierre Gramegna called the label a new tool to “encourage fund stakeholders to act responsibly and aim for the achievement of a better and sustainable future”.
“As there is no existing product based label covering ESG, the new ESG label fills a gap in the European investment fund market,” added LuxFLAG Chairman Thomas Seale, who is also chief executive of European Fund Administration, the bank-backed administration and middle office services provider.
Nathalie Dogniez, Partner, PwC Luxembourg
Ulrika Hasselgren, President, Ethix SRI Advisors
Adrie Heinsbroek, Sustainability Advisor, ING
Nicolas Hennebert, Director, Deloitte Luxembourg
Hakan Lucius, Head of Corporate Responsibility, EIB