Label SRI
The SRI Label aims to increase the recognisability of Socially Responsible Funds (SRI) for savers, and to ensure that various extra-financial objectives are actively managed by the funds, in the areas of the environment, Society and governance
Generalities
| Label | Label SRI |
| Nationality | France - French/English |
| Management | Label issued by the French Ministry of Economy and Finance |
| Label type | SRI |
| Website | https://www.lelabelisr.fr/label-isr/ |
| Market | The label is open to mutual funds (including funds of funds and real estate funds) and management mandates. |
| Products | 1075 funds and products at the end of June 2022 |
| Links to funds | https://www.lelabelisr.fr/comment-investir/fonds-labellises/ |
| Criteria | https://www.lelabelisr.fr/wp-content/uploads/210830-Liste-fonds-label-ISR.xlsx |
| Periodicity | 3 years with verification of requirements every year |
Detailed data
| Description | The SRI Label aims to increase the recognisability of Socially Responsible Funds (SRI) for savers, and to ensure that extra-financial factors related to the environment, Society and governance are actively managed by labelled funds |
| Genesis and development | The SRI Label was created in 2016 as a public initiative following a request from French financial actors. The Ministry owns the Label, which it manages with a highly structured process. A first version of the Label "v1" was in force until October 2020, at the end of which funds must have adapted their investment process to meet the current criteria (v2). |
| Objectives | The complexity of the SRI issue has led public authorities to favour a delegated approach, requiring products to comply with a set of organisational principles and thus providing reassurance to investors that the label meets the key criteria of intentionality of management and performance monitoring to be considered effectively an "SRI fund". |
| Promoters and administrators | The SRI Label, initiated by the Ministry of Finance, relies on a 'Label Committee' comprising 12 experts from Society (trade unionists, managers, academics...), and a Scientific Committee of 4 members (academics) who define the mandatory and optional requirements. It is then administered by three independent certifying bodies pinned down by the national body that manages accreditation (COFRAC), which decide on the eligibility of candidates independently, on the basis of the established audit criteria. |
| SRI approach | There are six pillars: 1) transparent ESG objectives; 2) a strategy and system for overseeing the objectives; 3) clear integration into the investment process; 4) an engagement strategy towards investments in Portfolio; 5) transparent communication of results; 6) constant monitoring of ESG performance and positive impacts achieved |
| Mandatory Criteria | ESG objectives must be clearly expressed in the prospectus and marketing material, and ESG assessments must be clearly linked to the investment process, and conducted by qualified resources; traceability of ESG results is ensured over time on at least 90 per cent of Portfolio, and financial techniques exclude speculative approaches. The fund implements an active engagement policy at Society in Portfolio. Transparency towards investors is guaranteed |
| Additional criteria | There are no real optional criteria: the fund has broad discretion of action in defining ESG strategies, but must ensure close supervision of the objectives, strategy, measures and results on the economy, and apply the specific requirements relating to each strategy (Best-in-Class, derivatives, engagement policy, enhanced transparency...). |
| Allocation process | Society wishing to obtain the label must join the Promotion Organisation and prove that they meet the eligibility criteria. The application is first examined by an accredited certification body (AFNOR Certification, Deloitte, EY France) who check the requirements and draw up an audit report and decide independently to award the label. They then inform the French Ministry of Finance. A public body specialised in accreditation, COFRAC, provides the Ministry with qualified support in the selection and due diligence of accredited bodies awarding the label. |
| External certification | The SRI Label includes a detailed audit protocol and an annual review of both the performance against expectations and the ESG organisation of the funds. |
| Focus on transparency | Enhanced transparency is foreseen towards both the label and investors, who must be able to easily read the ESG objectives and results achieved through annual reports made available to investors. |
| Focus on periodic checks | The annual audit process by the accredited body aims to verify both ESG management processes, investment processes, and the monitoring of results as well as the impact on the economy. |
| Related parties | The management mechanism is largely delegated by the Ministry of Finance to competent third parties: COFRAC to issue audit instructions and qualify candidates for accreditation, and accredited bodies specialising in audit and quality assurance (EY France, Afnor Certification, Deloitte). |
