All about the sustainability label
How do you recognise a sustainable investment?
Sustainability plays a major role in our society and more and more people are consciously making sustainable choices. This applies to what we eat and how we live, but also to how we invest. We avoid activities that are harmful to people, the environment or society and prefer to invest in a sustainable project. Unfortunately, it is not always clear what exactly is sustainable and what is not.
That is why Febelfin has developed a minimum quality standard and a label for sustainable financial products. If a fund carries such a sustainable label, you can be sure that you are not investing in activities that are harmful to people, animals, society or the planet. Today, there is a choice of 311 different funds that carry the label.
Why is a sustainability label necessary?
Sustainable investing is on the rise. In no less than four years (between 2013 and 2017), the volume of sustainable investments on the Belgian market rose from €7.7 billion to €24.1 billion.
However, it was not always clear what exactly a "sustainable investment" was. Each fund had its own definition of sustainability, which caused confusion and many questions. Is it only investments in fossil-free activities? Or does it mean that a company invests in, say, sustainable forestry? And is sustainability always linked to the environment?
In order to give a clear answer to all these questions, Febelfin - together with stakeholders from both within and outside the financial sector - developed a minimum quality standard in the spring of 2019.
What is the sustainability label?
When a fund has the Towards Sustainability label, it meets the minimum quality standard for sustainable investment. As an investor, you can therefore rest assured that the financial product is managed with sustainability in mind.
Investors in a financial product with this label can be sure that they are not investing in the arms or tobacco industry, highly polluting activities or companies that violate human or labour rights. The quality standard excludes harmful activities and encourages companies to conduct their business sustainably and to report on it correctly. And no, the standard does not only look at the environment. The investments are also screened for performance in terms of social policy and good governance. In this way, the label provides clearer information on what is understood as a sustainable investment.
How does a fund obtain the Towards Sustainability label?
Funds that believe they meet the minimum standard must apply and undergo an extensive assessment. First by a control body consisting of Forum Ethibel and the academic institutions ICHEC and UAntwerpen, and later by the independent labelling agency CLA (Central Labelling Agency).
If the funds pass this audit, they are awarded the sustainability label. Thanks to this strict process, the investor is sure that a sustainable investment is not just a hollow phrase, but is actually good for people, society and the planet.
The Belgian sustainability label is one of the strictest in Europe, and undergoes a review every two years to remain in line with consumer expectations, social needs, scientific research, data availability and new regulatory initiatives.
How can I find sustainable investments?
The website https://www.towardssustainability.be/lists all investments that are allowed to carry the sustainability label. You can be sure that each of them meets the minimum quality standard.
There is more: each labelled product has its own web page and Sustainability ID. This makes it immediately clear in what way the product is sustainable. This also makes it easy to find the investment that best matches your personal convictions.
Would you like to know more about the minimum standard and the sustainability label?