LUXFLAG Microfinance

The world's first Microfinance Label was launched in July 2006 by LuxFLAG with the aim of reassuring investors that the fund (Microfinance Investment Vehicle - MIV) actually invests, directly or indirectly, in the microcredit sector.

Generalities

Label	Luxflag-Microfinance
Nationality	Luxembourg - English
Management	label issued by LUXFLAG an independent Luxembourg non-profit rating agency.
Label type	Thematic
Website	https://www.luxflag.org/labels/microfinance/
Market	The label targets Luxembourg funds and SICAVs
Products	27 to the end of June 2022
Links to funds	https://www.luxflag.org/labels/microfinance/labelled-mivs.html
Criteria	https://www.luxflag.org/media/pdf/2021-Q2-MF-List-of-LuxFLAG-Labelled-Products.xlsx
Periodicity	12 months

Detailed data

Description	The world's first Microfinance Label was launched in July 2006 by LuxFLAG and aims to reassure investors that the Microfinance Investment Vehicle (MIV) does in fact invest, directly or indirectly, in the Microfinance sector.
Genesis and development	The world's first and only Microfinance Label was launched in July 2006 by LuxFLAG. The label comprises more than 60% of the world's existing Microfinance Investment Vehicles (MIVs), representing more than 5.9 billion assets under management.
Objectives	The primary objective of the LuxFLAG Microfinance Label is to assure investors that the Microfinance Investment Vehicle (MIV) actually invests, directly or indirectly, in the microfinance sector. The MIV is allowed, rather than lending directly to Microfinance Institutions (MFIs), to invest in other MIVs itself that invest more than 50% in Microfinance.
Promoters and administrators	The Label was created by the LUXEMBOURG FINANCE LABELLING AGENCY, an independent and international non-profit association created in Luxembourg in July 2006 by seven public and private founding members with the aim of promoting the responsible investment sector by assigning a recognisable label to microfinance investment vehicles.
SRI approach	In order to obtain the label, funds must have a Portfolio microfinance corresponding to at least 50% of the MIV's total assets and a well-defined impact investing strategy and objective
Mandatory Criteria	The compulsory criteria are: to have a Portfolio microfinance business corresponding to at least 50 per cent of the MIV's total assets and to have an impact investing strategy and objectives (companies and funds aiming to generate a social and environmental impact together with a financial return) whose impact is measurable and concrete.
Additional criteria	Only minimum requirements for access to the label are indicated
Allocation process	The Society candidates must check their eligibility with Luxflag and prepare a letter of intent with a checklist of documents. The Label checks their eligibility and submits the file to the Microfinance Label Eligibility Committee, which gives an eligibility opinion. The Board of Directors of Luxflag decides on the awarding of the label. The process takes approximately 2 months. The Label has a duration of one year and must be renewed.
External certification	The label is valid for one year and can only be renewed 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 expiry of its label.
Focus on transparency	The fund must necessarily be classified as an Article 9 (SFDR) and publish at least annually audited financial information for investors
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 to supervision equivalent to that of the EU Member States.
Related parties	Luxflag is a joint initiative of the Luxembourg Government, the Association for the Promotion of Finance in Luxembourg, the EIB, the trade association of fund managers (ALFI), the non-profit association ADA (Microcredit), the Association of Luxembourg Banks and the Luxembourg Stock Exchange.