Febelfin helps consumers make conscious choices for sustainable investments

7 February 2019

Consumers today are making increasingly responsible choices. This applies to what they eat, how they travel, but also to their money. They therefore prefer not to invest in activities that are harmful to humans, the environment or society. That is why Febelfin has developed, in consultation with banks, fund managers and civil society, a quality standard for sustainable financial products, such as investment funds. If these products meet the standard, they can obtain a sustainability label. With this standard, Febelfin aims for greater transparency for its clients and wants to encourage the financial sector to take more responsibility in the climate challenges.

What is sustainable?

Today, there is already a wide range of sustainable financial products, from investment funds to savings products and insurance funds. The volume of sustainable investments tripled between 2013 and 2017, from €7.7 billion to €24.1 billion (source: study MIRA, 2018). However, it is not always easy for investors to decipher the exact meaning of the term "sustainable".

Anyone who wants to invest sustainably must undertake complicated verification work to ensure that their money will only end up in companies or activities that correspond to their personal convictions about people, the environment and society. For example, a sustainable investor will not like to see his money invested in the arms or tobacco industry, highly polluting activities or companies that violate human or labour rights.

What do the sustainability standard and the label represent?

With the quality standard and, above all, the sustainability label, consumers can rest assured that they are not investing in highly damaging business activities, but in companies with a clear sustainability strategy and transparent policies on issues that are the subject of public debate, such as nuclear energy.

Investors receive clear and understandable information about the product's sustainability policy, which they can then compare with other products in their conscious investment choice. In addition, an independent body will check whether the product meets the standard and deserves the label.

How does the label contribute to the climate?

Although the label is broader than a purely eco-label, particular attention is paid to the climate impact of companies in the energy sector, among others. For example, companies that commit to switching to less environmentally damaging alternatives or renewable energies can be given a place among sustainable financial products. Companies that are still too involved in the most harmful fossil fuels, such as coal, will be excluded. In this way, the financial sector ensures that investments are directed towards companies that want to strengthen their positive impact.

Some companies in the energy sector are still too involved in controversial energy sources such as shale gas. However, it is still possible to invest in these companies until 2020 - to a very limited extent - but the product will then be awarded an appropriate label. In any case, climate impact requirements are regularly tightened.

Will the label evolve further?

The Belgian sustainability label is already among the strictest in Europe. However, sustainability cannot remain limited to a very small group of niche products. If the financial sector wants to encourage real change, the quality standard must have ambitious objectives. In this way, all market participants, both investment product providers and investors themselves, will be involved.

Febelfin encourages banks and asset managers to raise the bar even higher, which is already the case for many products. Moreover, the standard will be regularly reviewed and adapted to societal needs and customer expectations.

The first labels are expected in the autumn.

Looking for additional information?

The full text of the norm can be found in the file attached below.

For additional information, please contact our press service (+32 2 507 68 31 – press@febelfin.be).

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