ANNEX 1 : TRANSITION CHARACTERISTICS IN EXISTING ECOLABELS

Award criteria(Description) Engagement (Science-based)targets Green Revenue Thresholds

Green Capex Thresholds

GHGemission metric Other(e.g.,Parisaligned benchmarks, PAB)

DraftEU Ecolabel (public initiative; European Commission)

Seven differentcriteria:1)clear green revenue &green capex thresholds;2)Exclusions;3) Socialandgovernance aspects;4)Engagement;5) Measurestaken to enhance investor impacts;6)&7)linked to disclosure.

EngagementPolicy(with indicationsonobjective& strategy),Votingrights(with specificationswhich companiesshouldbe approached),clear dialogue policies.

Companiesfromthe fossilfuelsector that meetvarioustransition criteria(targetsbeing oneof them)can be removedfromthe exclusion list.

NordicSwan Label (public initiative; Nordic Council of Ministries; i.e., Denmark, Finland, Iceland, Norway and Sweden)

Obligatoryrequirements

+ascoringsystemof which6 outof 14possiblepointsneed to bereached.

Engagementwithatleast 5%/10% ofthefund's holdings:1-2points

1pointforreportingon engagement

+Regular voting(3points)

If >= 25%ofcompanies haveavalidatedsciencebasedtarget(→1point).

If >=50%of companies haveavalidatedsciencebasedtarget(→2 points).

WithPC =portfoliocontribution ofeach company.GTandGC =green turnover and green capex(definedviatheEUTaxonomy).T isthetotalturnover per firm.

G(the“portfolio greenness”)mustbeatleast 50.

Includedin formula abovewhichcontains green revenueandgreen capex(definedbyEU taxonomy).

1 point for G>= 0.05; 2 points for G >= 0.10; 3 points for G>= 0.20; 4 points for G >= 0.30; 5 points for G >= 0.4; 6 points for G>= 0.5.

Notexplicitlyaddressed. However,“green”revenue or capexismeasuredby theEUTaxonomyandGHG emissionsarean essential partof thetechnical screeningcriteriaon ClimateChangeMitigation (ObjectiveI).

Explicitlymentionedas partoftheobligatory requirements(O13–Reductionsof GHG emissionsin critical sectors)

Alistof “Measuresthat can betaken to enhancetheinvestor impactoftheproduct” (Criterion5).

Other categories under “Enhanced analysisandinclusion” (P2),suchasPAB

FNGLabel (private initiative, Qualitätssicherungsges ellschaft Nachhaltiger Geldanlagen)

For themostbasiclabela rangeof minimumstandards needto befulfilled. Upto three“stars”can becollected to signalenvironmental excellence.Thisisbasedon: institutional credibility(10%), productstandard (20%), selection strategy(35%), engagementstrategy(25%) andsustainabilityKPIs(10%)

Greenfin (public initiative, French Ministry of Ecological and Solidarity Transition)

Theexerciseof votingrights andtheapplication of an engagementstrategyis incentivized.To gobeyond theminimumstandard, applicantscan scoreupto 25% on votingand engagementif theywantto reachthenextawardlevel.

No explicitreferenceto SBTs.However,the applicantcan “promote thetransformation effect of thetitles”by“using methods”to increasethe sustainability contribution oflowerratedfirms.(Seep.22f.)

Differentcriteriaexist.For example,on the“green”share (criterion1.2),exclusion criteria(1.3),or thatthefund manager shouldmeasure“the actualcontribution ofits investmentsto theenergyand ecologicaltransition”(3.1).

No referenceatall to an activeengagementprocess or votingrights.Thisleaves outan importantimpact channel.

Thereareno clear greenrevenue,green capexor GHGintensitythresholds. However,theycouldallbeevaluatedaspartof2.3.4.1(positivecriteria)or 2.3.4.3(sustainabilityKPIs).

Austrian Ecolabel (public initiative, Austrian Federal Ministry of Environment)

Thepointsawardedfor the fields’selection criteria(point 2.3.1),implementation of selection criteria(point2.3.2), requirementlevel(point2.3.3) andbonus(point2.3.4)must amountto atleastto 70% of themaximumnumber of pointsthatcan beobtained for therespectiveproduct category.

LuxflagClimate Finance (private initiative;)

Exercisingvotingrights/ applyingan engagement strategyisincentivized: Bonuspointscan be earned for exercisingvotingrights;or a“clear andstructured” engagementapproach(see chapter 2.3.4.1,2.3.4.2)

No referenceatallto SBTsor forward-looking targetsatcompanylevel

Theonly(minor)link:the investable universe is clearlydefinedand buildson ataxonomyby CBI.Low-carbon buildingsmusthavean action plan foroverall reduction of energy consumption &GHG emissions(see Appendix 1)

Awardedonlyin combination with engagement: measurementof carbon footprint+reduction pathreachingatleast four yearsinto thefuture. Onlybonuspoints.

Green revenue thresholdsexist.: dependingon financialproduct, differentthreshold appliesregarding shareof typeI / “Greenfin” companies(>50% of turnover from ecoactivitiesmentioned in CBI-based taxonomy) n/a

No referencetoCapEx or greeninvestments asaspecificmetric.

Fundsshouldreporton climatechangeKPIs(or water or biodiversityor naturalresources).And shouldmeasurethe environmentalimpact. Sincethesector focusison climate-relatedsectors, thiswillbeaboutGHG emissions.

No referencetoCapEx or greeninvestments asaspecificmetric.

For climatechange mitigation,onemust screen andevaluate companies–butthereare no strictevaluation criteria GHGreduction ispartially incentivized by engagementand a reduction path(see column on targets).

Investmentproductswitha clear anddirectlink,to mitigation and/or adaptation of climate changeor crosscuttingactivities.

No referenceatallto an activeengagementprocess or votingrights.Thisleaves outan importantimpact channel.

No referenceatallto SBTsor forward-looking targetsatcompanylevel.

“Investmentsin listedand non-listed entitiesmusthaveat least50% of their turnover generated fromClimate Financeactivities”

No referencetoCapEx or greeninvestments asaspecificmetric.

“Expectedtonnesof carbon dioxideequivalent (tCO2eq.)to bereduced or avoided”are mentioned asoneof many“indicative measurementfactors”

Bonuspointsfor institutionalcredibility

LuxflagESGFinance (see above) Investmentproductsare100% screenedbyatleastthree out of fiveESGstrategies(Best-in class,Exclusions,Engagement, ESGintegration,Impact Investing)

Atleastthreeoutof fiveESG strategiesmustbeapplied Engagementcan beoneof them(butdoesnothaveto be).An activeengagement approachistherefore incentivized.

Towards SustainabilityLabel (Belgium)

(private initiative; Central Labelling Agency; not-for-profit association)

A“sustainablefinancial productshallmake useof the followingstrategies:ESG integration,normative screening,Exclusion andat least1additionalstrategy (bestin class,sustainability themedinvesting,impact investing, over/underweighting,....)

Mandatoryfor the fossilfuel sector –and“encouragedfor other sectorswithelevated risksfor principaladverse impacts” Chapter 1.7 containsguidelines.

SBTsareonlypartof the labelcriteriafor “harmful activities”.Companies involvedin Coal,Oil & GasandPower Generation mustfulfil oneof thefollowing criteria:SBTItarget;<5% of revenuefromharmful activities;capex thresholdstolimit “brown” expansion and increasethe“green” share.

“Sustainability themedinvesting” is oneoptionalESG strategywithclear revenuethresholds (seeChapter 1.5).

CapExisonlypartof thelabelcriteriafor “harmfulactivities”. Companiesinvolvedin Coal,Oil &Gasand Power Generation mustfulfiloneofthe followingcriteria:SBTI target;<5% ofrevenue fromharmful activities;capex thresholdstolimit “brown”expansion andincreasethe “green”share.

No clear linktoGHG emissions.Atbest,they couldbepartof the applicant’ sESGstrategy (for exampleimpact investingor bestin class)–buttherearenoincentives todo that.

GHGemissionsmustbe reported.Other than that, thereisno specific reference.GHGemissions couldarguablybepartof theoptional ESGstrategies “best-in-class” or “Impact Investing” –butthereisno indication towardsa benchmarkor reduction.

Sustainable InvestmentLabel

“Sustainable Improvers” (public initiative, UK FCA, Financial Conduct Authority)

Threelabelsfor thefollowing categoriesareproposed: SustainableFocus, SustainableImprovers(i.e., transition label),Sustainable Impact. Theproposed qualifyingcriteriaare(1) sustainabilityobjective,(2) investmentpolicyand strategy,(3)KPIs,(4)resources andgovernanceand(5) investor stewardship.Crosscuttingandcategory-specific considerationsforthe 5 criteriaapply n/a

Investor stewardshipis identifiedasthemain channelfor thesustainability outcome.Stewardship activitiesshouldbe in alignmentwiththe sustainabilityobjective (shouldbeshown withto be selectedKPIs) However, thereareno specific requirements.

No specificKPIsarerequired. Onlyreferencetoframeworksthatcouldbe usedfor theKPI selection,e.g., theInternationalCapitalMarketAssociation’s (ICMA)registryofillustrativeKPIs(link).