Institutionalising responsibility Being responsible and transparent towards investors and towards the community as a whole is no longer a question of choice but must be considered as a requirement for asset managers. The recent financial crisis has forced us to set up minimum standards and mechanisms to build up transparency and credibility within the financial sector. This has led to growing support for initiatives such as the United Nations Global Compact Principles, United Nations Principle for Responsible Investing (UNPRI), etc. On the other hand, governments and financial regulators in various countries have started taking concrete steps towards institutionalising responsibility within the financial as well as business community. One example of this is the inclusion of information on Corporate Social Responsibility in the annual reports of companies or provision for providing extrafinancial reports on an annual basis. Asset managers now accept that the integration of minimum standards for Environmental, Social and Governance (ESG) issues in the investment process is a requirement from the investor community. A Environmental/Social issue
Investor interest
Integration of ESG in investment process
In Luxembourg, various stakeholders both from public and private sectors, including ALFI, recognised the importance of transparency in the financial sector well in advance of the financial crisis. This thought process resulted in the creation of LuxFLAG - an independent international labelling agency specially focused on the Responsible Investing sector.
The Agency aims to promote the raising of capital for responsible investing sectors by awarding a recognizable label to eligible investment vehicles. Its objective is to reassure investors that the labelled investment fund invests most of its assets, directly or indirectly, in a responsible manner. As of January 2014, the agency had awarded 26 Microfinance Labels and 09 Environment Labels to investment funds representing approximately USD 4 billion assets under management. More details about the labelled funds and upcoming application processes for LuxFLAG Labels are available on www.luxflag.org
Sachin S VANKALAS, Operations Officer
Sachin.vankalas@luxflag .org