how to choose an environmentally responsible fund

Currently, over a thousand funds have received the French SRI label, the first sustainable European label in terms of the number of funds and assets under management marked. A rich selection that does not make the task of the custodian easier. Moreover, this label coexists with others that are similar in other European countries (FNG-Siegel in Germany, Towards Sustainability in Belgium, LuxFlag in Luxembourg), but differ in their approach on a French scale, such as Finansol (financing social and economic solidarity) or Greenfin (green finance). These labels are mapped to national and supranational rules, which is unlikely to improve overall readability. To take just one example, the European SFDR (Sustainable Financial Disclosure Regulation), which came into force on March 10, 2021, requires fund managers to classify their funds into three categories to avoid green laundering in their communications. If funds classified as “Article 6” cannot be presented as stable funds, “Article 9” funds are the most active, and “Article 8” funds are in the middle.

In addition to the amount of funds, the level of need for SRI labeling is questioned, while the aspirations of a significant part of society are of great importance. “The SRI label needs to be revised to be more stringent in its eligibility criteria.says Julien Niquet, president of Epsor, who has conducted research on more than 800 equity funds, whether they are labeled or not. There is a gap between what the saver buys and what he thinks he is buying. The overlap is significant: 53.3% of companies invested in are shared between labeled and unlabeled funds. The difference is not enough. »

“The SRI label requires the fund manager to exclude 20% of companies from their investment universe.recalls Pascal Bossant, director of heritage management firm Baussant Conseil and member of the label’s committee since its revamp last October. We have a filter that filters out 20% of the worst students, this is the first selection. » Pending the results of the label reform currently under development, how can we identify foundations that are truly involved in environmental transition or the integration of people in distress? “The first easy way to make a choice is to look at more dedicated labels like Finansol for solidarity funding or Greenfin, which the Ministry of Ecological Transition presents as a dark green label.”advises Pascal Bossan.

“The logic is to invest in good students”

This sesame provides for the exclusion of companies in the fossil fuel and fissile energy sectors, in favor of investments in eco-activities. “The logic is to invest only in good students, but these funds are not designed to support the transition of companies that emit high greenhouse gas emissions”notes Pascal Bossan. “We can combine several criteria by choosing a fund with the Greenfin label and Article 9 classification under the SFDR regulation, which is a real guarantee of quality.Julien Nike adds. One can simply regret that few Greenfin funds are easily accessible to the general public. » There are half a dozen Greenfin equity funds open to individuals.

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“We need to go beyond the mere labeling of the fundsays Augustin Vincent, Head of ESG Research at Mandarine Gestion. It is necessary to learn about the management process, about the non-financial criteria taken into account, to make sure that they meet the expectations of the investor. »“Hunting for information is necessary to know, on the one hand, the degree of commitment to the fund’s investment strategy, and on the other hand, the content of the fund’s portfolios.confirms Julien Niquet. The information is available in the management company’s regulatory documents and management reports and is easier to digest through fund analysis platforms such as Morningstar or Quantalys. » Pascal Bossan offers a different level of reading. “Some management companies undertake to donate part of the remuneration for the management of their funds to charity in favor of associations or foundations. This is a perfect example of the consistency of their commitments. It does not cost the depositor a single euro, while for the managers it is a real loss of earnings. »