For the second time, the FNG – the German Sustainable Investment Forum - has awarded the FNG label, the first SRI certification in german-speaking countries. In order to obtain the label, applying funds have to show high transparency (FNG-profile and Transparency Code disclosure) and process standards (ESG analysis of 90% of the assets in their portfolio). Moreover, they should exclude issuers from highly controversial sectors (nuclear, weapon).
One label = 4 quality grades
On top of the minimum requirements, the methodology consists of a grading model. A fund may receive up to three stars if it shows strong performance in the sections “Institutional Credibility”, “Products standards” and “Impact”. The latter assesses the impact via the fund’s investment process as well as shareholder dialogue and engagement activities towards its holdings. Furthermore, disclosure of ESG performance is positively assessed.
In 2016, the FNG label has been awarded to 38 funds, three more than in 2015. 7 (2015: 3) funds have received the highest grade of 3 stars, 21 (14) funds 2 stars and 10 (15) funds 1 star. These funds are offered by 17 candidates.
The average points the funds achieved for further sustainability activities in the grading model has increased from 48% in 2015 to now 57%. Notable progress could be observed in better, more transparent reporting practices. Furthermore, small asset managers are starting cooperation with shareholder associations to execute effectively their voting rights or bundle their forces in order to have a stronger position in engagement actions.
The results reveal the growing actions of candidates to tackle climate change, too. 14 out of 17 candidates have taken various measures. Most prominent is the exclusion or limitation of coal investments. The first time application of two impact bonds funds shows the growing engagement of asset managers in specific green investment funds. To evaluate the environmental impact of these investments, the FNG label relies on the internationally well-accepted taxonomy of the Climate Bond Initiative. Furthermore, 16 out of 38 funds measure the carbon impact of the portfolio.
Detailed results can be found in the presentation available in the section "More information".
The new application period will start in spring 2017.
The FNG Label is open to all sustainable mutual funds that comply with the European UCITS directive (or equivalent) and that are distributed either in Germany, Austria, Switzerland or Liechtenstein.