LUXFLAG ESG

The Label LuxFLAG assesses the sustainability commitments and investment strategies of "ESG" mutual funds and protects investors by certifying that the funds integrate extra-financial risk management with its investment strategy throughout the investment process.

Generalities

Label	Luxflag-ESG
Nationality	Luxembourg - English
Management	Label issued by LUXFLAG an independent Luxembourg-based non-profit rating agency
Label Type	SRI
Website	https://www.luxflag.org/labels/esg/
Market	The label is aimed at Luxembourg funds and SICAVs.
Products	293 to the end of June 2022
Links to funds	https://www.luxflag.org/labels/esg/labelled-esg-funds.html
Criteria	https://www.luxflag.org/media/pdf/2021-Q2-ESG-List-of-LuxFLAG-Labelled-Products.xlsx
Periodicity	12 months

Detail data

Description	The Label LuxFLAG assesses true investment strategy commitments and helps investors with product selection. The applicant must demonstrate how it integrates its ESG strategy and criteria throughout the investment process.
Genesis and development	The LuxFLAG ESG Label was launched in May 2014 with the ambition of being the first European ESG Label. It was born out of a desire to give visibility to integrated ESG issues, which is the largest category in the responsible investment landscape with enormous growth potential.
Goals	The primary objective of the LuxFLAG ESG Label is to assure investors that the investment product effectively incorporates ESG criteria throughout the investment process. Eligibility criteria require that applicant funds monitor 100 percent of their Portfolio investment according to three of the ESG strategies and standards recognized by LuxFLAG
Promoters and administrators	The Label was created by the LUXEMBOURG FINANCE LABELLING AGENCY, an independent, international nonprofit association created in Luxembourg in July 2006 by seven public and private founding members with the aim of promoting the responsible investment industry by assigning a recognizable label to eligible investment vehicles
SRI Approach	To obtain the label, funds will necessarily have to have a strict policy of excluding assets that are not considered sustainable in addition to at least 3 other ESG strategies for selecting investments from Best in Class, Regulatory Screening, Engagement, ESG Factor Integration, and Impact Investing
Mandatory Criteria	The minimum criteria to comply with obtaining the label are: having an appropriate Exclusion Policy (The fund must refrain from investing in industries and companies that do not consider the concept of sustainability) and complying with general eligibility requirements (The applicant investment fund must screen 100 percent of its Portfolio investment according to its ESG strategies and standards recognized by LuxFLAG)
Additional criteria	In order to obtain the label, it is also necessary for the fund to use at least three of the following ESG strategies: Best in class investment selection method (based on ESG ratings), Engagement policies of its holdings, Regulatory Screening (not investing in holdings that may have violated international regulations), Integration of ESG factors and impact investing (investing in high social impact issues)
Allocation process	The Society applicants must verify their eligibility with Luxflag and prepare a letter of intent with a checklist of documents. The Label checks their eligibility and submitted the file to the Label Eligibility Committee Luxflag ESG, which gives an eligibility opinion. The Board of Directors of Luxflag decides on the awarding of the label. The process takes about 2 months. The Label lasts for one year and must be renewed.
External certification	The Label is valid for one year, and it will be possible to renew it only after ensuring that the eligibility criteria are still met. To this end, LuxFLAG will send the fund an invitation to submit an updated application at least two months before the expiration of its Label
Focus on transparency	The fund must necessarily be classified as Article 8 or 9 (SFDR) and must publish the entirety of its Portfolio at least once a year
Focus on periodic checks	Compliance with the criteria is monitored every 12 months by LuxFLAG and, in addition, each fund must be subject to supervision by an EU member state or supervision equivalent to that of EU member states
Related parties	Luxflag is a 'joint initiative of the Luxembourg government, the Luxembourg Finance Promotion Association, the EIB, the industry association of fund managers (ALFI) the non-profit ADA (Microcredit) Association, the Luxembourg Banks Association and the Luxembourg Stock Exchange.

LUXFLAG ESG

Generalities

Detail data

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