Luxembourg offers authenticity label to ESG funds

SRIA Luxembourg agency aims to improve the credibility of the responsible investment sector with a new label for funds which meet environmental, social and governance (ESG) criteria.

LuxFlag, a fund labelling agency, says the new ESG label is available to Ucits and AIFMD funds domiciled in Europe or equivalent jurisdictions.

Thomas Seale, chairman of LuxFlag, spoke in the March Funds Europe Luxembourg report of LuxFlag’s intention to launch an ESG label. The ESG label complements LuxFlag’s existing two labels for environmental and microfinance funds.

The agency says three asset managers plan to apply for the label so far: Sweden-based Nordea, which manages €636 billion; France-based OFI Asset Management, which has €60 billion and Sparinvest, which was founded in Denmark and has more than €9 billion under management.

Seale says the label will help differentiate funds from other products and improve transparency and visibility for responsible investment funds if the funds meet the agency's criteria.

“Over the past ten years, the responsible investment sector has grown at a rate that has outstripped growth in most other investment strategies,” says Pierre Gramegna, Luxembourg minister of finance, in a LuxFlag press release.

Responsible investing, Ucits and alternatives officially form the “three pillars” of the Luxembourg fund industry’s future development. Luxembourg currently has the largest market share of ESG funds, at 23% of registered funds, though is second to France in terms of assets, according to KPMG figures.

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