ALFI, the Association of the Luxembourg Fund Industry, welcomes today’s publication of the European Commission’s ‘Action Plan: Financing Sustainable Growth’.
ALFI has been at the forefront of actively promoting sustainable finance opportunities for asset managers. ‘Responsible Investing’ is a major pillar of the Luxembourg investment fund industry and ALFI firmly believes that asset managers can play a key role in sustainable finance. Market growth has strengthened this conviction: the European Responsible Investing fund market has almost doubled since 2010, reaching 476 billion EUR of Assets under Management at the end of 20161.1 Luxembourg is the leading domicile for European Responsible Investment Funds, accounting for 31% of funds and 35% of total Assets under Management.
ALFI therefore supports the overall objectives of the Action Plan. However, with regard to the final report by the High-Level Expert Group (HLEG) on Sustainable Finance, it is important to bear in mind that ‘ the art of implementation will be to not increase the overall regulatory burden and complexity’2 .
Denise Voss, Chairman of ALFI, says: “Whilst we welcome the Action Plan, we believe that no specific legislative measure is needed to clarify asset managers’ duty to incorporate sustainability in the investment process. Market growth demonstrates that managers are already aware that sustainability criteria are essential elements in ensuring that they act in the best interest of their clients over the long term. The concept of asset managers’ fiduciary duty is already aligned with sustainable and responsible investment.”
ALFI also believes that it is essential that the European Union does not restrict the investment universe available for European asset managers.
Ms Voss continues: “A prescriptive approach to these issues is not required and may slow innovation and further development. Greater transparency and market clarity however are a priority and the proposal for a unified EU classification system or taxonomy to define what is sustainable (and what is not) is a positive step. In addition, the enhanced disclosure requirements go in the right direction.”
She concludes: “We agree that labels are an important tool for investors, also for retail investors, and in order to build trust. A voluntary EU-wide scheme should ideally build upon the experience of the most advanced European labels, such as i.e. the LuxFLAG Green Bond or Climate Finance label.”
1ALFI KPMG Responsible Investing Fund Market survey, 2016
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