The sustainable investment and finance association for Germany, Austria and Switzerland, FNG, issued 104 sustainable labels to European funds this year, a 60% annual jump, it said.
Among asset managers applying for the label were Amundi, Comgest and La Financière de l’Echiquier, as French funds showed the strongest relative growth.
Roland Kölsch, chief executive of QNG and responsible for the FNG label, told Expert Investor: “French asset managers have a mature socially responsible investing (SRI) market with a lot of products and already have experience with their own labelling system, which is also part of their national legislation.”
Asset managers who were among the first to apply for the FNG label are from German speaking regions, including Erste Asset Management, LBBW Asset Management, Salm-Salm & Partner, Raiffeisen Capital Management and Union Investment.
FNG label
The methodology of the FNG label is based on minimum standards, such as transparency criteria and labour and human rights.
High-quality sustainable funds, which excel in the areas of institutional credibility, product standards and impact, can receive up to three stars.
Kölsch said: “Our external due-diligence helps fund selectors, broker associations, banks and insurance companies, not to be tricked into a scam, but to offer high-quality financial products.”
The growth of FNG-labelled funds is linked to increasing EU regulation on sustainable finance.
FNG said that the demand for professionally managed sustainability funds increases in response to amendments of Mifid II and the Insurance Distribution Directive (IDD), which incorporate an investor’s preferences in financial adviser’s suitability tests, and reflect these in product recommendations.
They are complemented by a separate signed proposal on disclosures relating to sustainable investments and sustainability risks, which aim to include environmental, social and governance (ESG) considerations in the decision-making process of investors and asset managers.
“The upcoming disclosure rules from the EU will make ESG-integration into risk management mandatory,” Kölsch added.
“So, the risk of low-quality/greenwashing [funds] is there. At the end, it is the consumer who will decide what kind of products it will choose; and a label is one way to differentiate a product from others.”
EU Ecolabel
The EU is also in the process of developing an EU Ecolabel as part of its sustainable finance action plan.
Kölsch explained why he believes that national labels will stay relevant even once an EU Ecolabel is published.
“As the taxonomy is a first step and built on the ‘E’, it will take years until a ‘S’ and ‘G’ taxonomy will be ready so that an overall SRI label will be feasible at EU level.
“That means that we will probably see more national SRI label schemes emerging. We already observe such developments in the UK and Spain at the moment.”
Kölsch also said that FNG would welcome exchange with all existing labels in order to bring about harmonisation.
