How do you recognize a sustainable investment?
4 min Reading time
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.
That is why Febelfin developed a minimum quality standard and a label for sustainable financial products. If a fund carries such a sustainable label, it is certain that you are not investing in harmful activities for people, animals, society or the planet.
Why is a sustainable label necessary?
Sustainable investing is on the rise. However, it was not always clear what a “sustainable investment” exactly is. Each fund had its own definition of sustainability, which caused confusion and many questions. Are these investments in fossil-free activities? Or does this mean that a company invests in a sustainable forestry? And is sustainability always linked to the environment?
In order to provide a clear answer to all these questions, Febelfin – together with stakeholders within and outside the financial sector – developed a minimum quality standard in the spring of 2019.
What is the sustainable label?
When a fund has the Towards Sustainability label, it meets the minimum quality standard for sustainable investing. As an investor, you can rest assured that the financial product is managed with sustainability in mind.
Those who invest in a financial product bearing this label can be sure that they are not investing in the arms or tobacco industry, highly environmentally polluting activities or companies that violate human or labor rights. The quality standard excludes harmful activities, encourages companies to act in a sustainable manner and to report on this 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 about what is now understood as sustainable investment.
How does a fund get the Toward Sustainability label?
Funds that believe they meet the minimum standard must submit an application and undergo a detailed assessment. First by a control body consisting of Forum Ethibel and the academic institutions ICHEC and UAntwerp, and later by the independent labeling agency CLA (Central Labeling Agency).
If the funds pass this check, they are awarded the sustainability label. Thanks to this strict process, the investor can be sure that a sustainable investment is not just an empty term, but is actually good for people, society and the planet.
The Belgian sustainability label is one of the strictest in Europe, and is reviewed every two years to remain in line with consumer expectations, societal needs, scientific research, data availability, and new regulatory initiatives.
How do I find sustainable investments?
On the website www.towardssustainability.be all investments are listed that may bear the sustainability label. You can be sure of each of them that they meet the minimum quality standard anyway.
There's more: each labeled product has its own web page and a Sustainability ID. This makes it immediately clear how the product is sustainable. This way you can easily find the investment that best suits your personal convictions.