Overview of european sustainable finance labels

French RI Market

Publication :June 2019

EUROPEAN SUSTAINABLE FINANCE LABELS, HETEROGENOUS QUALITY STANDARDS

Novethic publishes the first overview of sustainable finance standards and labels available in Europe.

« At a time when the demand for sustainable finance alternatives is growing, we felt it was essential to clarify the promises of the current offer of sustainable finance labels in Europe.»
Anne-Catherine Husson-Traore, CEO of Novethic.

In just over a decade, sustainable finance has led to the creation of 8 specialized labels. Granted to 414 financial products out of over 60,000 funds available on the European market. Designed to provide guarantees on the asset allocation in portfolios, they are used as points of reference by responsible investment practitioners and will have to win a larger audience when they will be distributed in retail banking and insurance.

► SUSTAINABLE FINANCE LABELS: VARIOUS MARKETING PROMISES ◄

In a regulatory context limited to reporting obligations, labels provide benchmarks and quality guarantees for both European responsible investment practitioners and asset owners. In France, the “Pacte Law” requires the distribution of  at least one SRI or Greenfin labelled fund in the life insurance offer by 2020. However, while the certification of a fund offer guarantees on the quality of processes, through an audit by an external third party, in practice it is not necessarily associated with a marketing strategy in line with the fund's promises. A quarter of the funds certified on ESG criteria do not have a name reflecting a sustainable approach and around thirty are thematic environmental funds.

 Novethic Semantic analysis of funds names ESG labels 396 funds

 

► ESG & GREEN LABELS: TWO FAMILIES WITH MANY COMMON CRITERIA ◄

Novethic European Sustainable Finance Labels Funds AUM

Since 2016, the year in which the French label now known as Greenfin was created, Novethic has certified two-thirds of the 30 funds that have obtained the label, for a total of €4 billion AUM. The analysis of the European context makes the repositioning of the Greenfin label more valuable. It benefits from major advantages since it combines investment in activities with environmental benefits, which are identified by a taxonomy, and exclusion of fossil and nuclear energies as well as controversial companies. 

"We believe that the Greenfin label is an important asset for individual investors as it orientates them towards green products that can clearly and legibly finance the green economy." Anne-Catherine Husson-Traore, CEO of Novethic