how to choose an environmentally responsible fund

There are now more than a thousand funds that have received the French mark SRI, the first stable European mark in terms of the number of marked funds and assets under management. Great choice that does not make the task easier for the saver. Moreover, this label coexists with others similar to other European countries (FNG-Siegel in Germany, Towards Sustainability in Belgium, LuxFlag in Luxembourg), but also differ in their approach on a French scale, such as Finansol (financing social and solidarity economy) or Greenfin (green finance). These labels are combined with national and supranational rules, which is unlikely to improve overall readability. Let’s take just one example: the European SFDR (Sustainable Financial Disclosure Regulation), which entered into force on 10 March 2021, requires management companies to classify their funds into three categories to avoid “green laundering” in their communications. If Article 6 funds cannot be presented as sustainable funds, Article 9 funds are the most attractive and Article 8 funds are at a medium level.

In addition to the amount of money, the level of requirements for the SRI label is questionable, and the aspirations of much of society go far. “The SRI label needs to be revised to be stricter in its eligibility criteriasays Julien Nike, president of Epsor, who conducted a study of more than 800 equity funds, whether or not. There is a gap between what a saver buys and what he thinks he is buying. Overlaps are significant: 53.3% of companies in which funds are invested are common to branded and unlabeled funds. The difference is insufficient. »

“The SRI label requires the fund manager to remove 20% of companies from its investment universe.recalls Pascal Bossant, director of the heritage management firm Baussant Conseil and a member of the label’s committee since its renewal last October. We have a filter that disables 20% of the worst students, this is the first selection. » How can we identify the funds that are really involved in the environmental transformation or integration of people in difficulty into the results of the label reform that is currently being prepared? “The first easy way to make a choice is to look at more dedicated labels, such as Finansol for Solidarity Finance or Greenfin, which the Ministry of Ecological Transition presents as a dark green label.”to advise Pascal Bossant.

“The logic is to invest in good students”

This sesame involves the exclusion of companies in the fossil and fissile energy sectors, while encouraging investment in environmental activities. “The logic is to invest only in good students, but these funds are not intended to support the transition of companies that emit high greenhouse gas emissions.”notes Pascal Bossant. “We can combine several criteria by choosing a fund with Greenfin labeling and Article 9 classification according to SFDR regulations, which is a real guarantee of quality.adds Julien Nike. One can only regret that few Greenfin funds are readily available to the general public. » Half a dozen Greenfin stock funds have been opened for individuals.

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“It is necessary to go beyond the simple labeling of the fundsays Augustine Vincent, head of ESG research at Mandarine Gestion. It is necessary to learn about the management process, about the non-financial criteria that are taken into account to make sure that they meet the expectations of the investor. »“The hunt for information is important in order to know, on the one hand, the degree of commitment of the fund’s investment strategy and, on the other hand, the content of the funds’ portfolios.confirms Julien Nike. The information is available in the management company’s regulatory documentation and in its management reports, and is easier to digest through fund analysis platforms such as Morningstar or Quantalys. » Pascal Bossant offers a different level of reading. “Some management companies undertake to transfer part of the fee for the management of their funds to patronage in favor of associations or foundations. This is a great example of the sequence of their commitments. It does not cost the saver one euro, and for managers it is a real loss of earnings. »