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First European ESG label launched
21 May 2014
Luxembourg gets ahead of the game as ESG sector continues to grow
The Luxembourg Fund Labelling Agency (LuxFLAG) has launched
the first European label for funds that follow environment,
social and governance (ESG) objectives.
The launch fills a gap in the European investment fund
market which has lacked a product-based label for ESG
Pierre Gramegna, Minister of Finance of the Grand Duchy of
Luxembourg, said: "The LuxFlag ESG label is a new tool in the
broad range of initiatives that encourage fund stakeholders to
act responsibly and aim for the achievement of a better and
sustainable future. We in Luxembourg strongly support this
Ucits funds or funds registered under the Alternative
Investment Fund Managers (AIFM) directive that are domiciled in
Europe or equivalent jurisdictions can apply to receive the ESG
label. It will only be granted to funds that meet specific
criteria in their ESG objectives.
OFI Asset Management, Nordea and Sparinvest are the first asset
management companies to apply.
"The new LuxFLAG Label is appropriate for investment funds
which truly incorporate disciplined ESG criteria in their
investment process. It will help these funds differentiate
themselves from other offerings in the market place and it will
help investors make informed decisions through the enhanced
transparency and visibility the label provides" said Mr Thomas
Seale, chairman of LuxFlag.
The label is granted for one year and can be renewed. It is
given by LuxFlag’s board of directors based on an
investment fund’s application and a recommendation
by the firm’s eligibility committee of
Gramegna pointed out that the rate of growth in responsible
investment during the past decade had outstripped that of most
other investment strategies.
A recent survey on RI funds by KPMG found that ESG was the
largest of all categories in the RI spectrum. The category also
experienced a steady increase in new funds.