Fund labelling agency LuxFlag has launched a Climate Finance label, intended to identify funds financing climate change mitigation and/or adaption measures.
The news comes as four managers – East Capital, Finance in Motion, Luxembourg Microfinance and Development Fund and Nevastar Finance – have announced they will be seeking labelling of their products using the new label. Products being considered for the label include the East Capital China Environmental fund and the Green for Growth fund advised by Finance in Motion.
LuxFlag already offers Microfinance, ESG and Environment labels for funds.
To receive approval to use the new label, funds must show that they are at least 75% invested in activities that mitigate or adapt to climate change.
The Luxembourg government has announced its support of the new Climate Finance label as it is seeking to position the jurisdiction as an international centre for climate finance. The country’s ministries of Finance, Sustainable Development and Infrastruure, and Foreign and European Affairs are supporting the initiative. Minister of Finance Pierre Gramegna said the labelling also indicated a practical response to the commitments made through the Paris Agreement on climate change.
“The LuxFlag Climate Finance label sets the scene for a transparent financial environment and provides investors with the necessary trust in climate finance investments. The Luxembourg Financial Centre has evolved into a green financial hub and offers a state of the art framework for climate finance,” he said.
Thomas Seale, chairman of LuxFlag, said that Luxembourg accounts for 69% of AUM in climate change funds in Europe, according to an Alfi/KPMG Responsible Investing fund survey carried out in the past year.