For the third 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 2017, the FNG label has been awarded to 45 funds (of 47 applying funds). 9 (2015: 7) funds have received the highest grade of 3 stars, 26 (21) funds 2 stars and 10 (10) funds 1 star. These funds are offered by 20 candidates. This represents an increase of about 25% in terms of candidates and funds.
Beyond the German-Speaking market, seven funds from the Netherlands, Italy, the Nordic region and Great Britain have been awarded. This proves the growing acceptance of the label on European Level. The scope of investment has risen, too. This year, a second convertible bond fund, two emerging markets funds, one Green Bond fund and a High Yield Bond fund have received the certification.
The visibility of the label could be strengthened continuously throughout 2017. The pension fund of the Land Nordrhine Westfalia (Assets under Management: 10.4bn EUR) orientates its investment guidelines to the FNG Label. All rewarded funds qualify automatically for the call for tender of yearly 200 Mio. EUR fund inflows. Furthermore, the label has been integrated on popular financial platforms. All these achievements as well as the numerous political initiatives on national and European level have helped the FNG Label to become the standard for SRI Certification in Europe.