Criteria of the Towards Sustainability label revised


The Towards Sustainability label for sustainable financial products is the most encompassing ESG-label in Europe almost 800 labelled products managed by more than 100 managers from more than 10 countries. More than 500 billion EUR is currently managed in line with its criteria. The label is managed and supervised by an independent non-profit entity: the Central Labelling Agency (CLA).

The criteria of the label are reviewed every 2 years. The 2023 revision process took place from November 2022 until June 2023. More than 50 financial and non-financial stakeholders were consulted.

This revision raises the ambition of the label regarding the energy sector, exercise of voting rights, minimal impact of ESG-strategies, and portfolio-level performance on GHG-intensity and gender diversity. Additional transparency is asked about engagement efforts, decarbonisation efforts at portfolio manager level, and policies on deforestation and single-use plastics. The criteria are made better adapted to emerging markets funds and sovereign bond portfolios.

The new criteria will apply as of 1/1/2024 for newly labelled products and as of 30/6/2024 for already labelled products.

Key changes in the 2023 criteria

Fossil fuels

  • Energy companies invested in shall not be involved in exploration, not be involved in exploitation or development of new oil or gas fields, and not be involved in building new coal-fired power stations. These activities are not compatible with any science-based transition scenario that is aligned with a maximum temperature rise of 1.5°C.
  • Managers shall explain possible exposures to companies on the Coal Exit List and Global Oil & Gas Exit List established by the German NGO Urgewald.

Corporate engagement & voting

  • The expectations focus on sectors with elevated risks e.g., textile, agriculture, mineral extraction, energy, and other carbon-intensive and high-emitting sectors.
  • Managers shall disclose their engagement policy and process, and shall exercise their voting rights in at least 50% of investee companies in high-impact sectors.
  • The manager shall report annually on its engagement activities and voting.

Criteria on impact of specific ESG-strategies

  • Applying a best-in-class or best-in-universe strategy shall lead to a reduction of the investable universe by at least 25%.
  • Portfolios aiming to do better than a benchmark on an ESG indicator shall outperform that benchmark by a minimum percentage, depending on the type of benchmark.
  • Impact investing products shall apply the Operating Principles for Impact Management (OPIM) or align with the Core Characteristics of Impact Investing as formulated by the Global Impact Investing Network (GIIN).

Sovereign exposures

  • When investing in sovereign bonds, the issuing government shall be assessed based on the strength of its governance. This is measured using the 6 Worldwide Governance Indicators (WGI), established by the World Bank (Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, Control of Corruption).
  • Additional stricter criteria are formulated for high-income States.

Portfolio-level criteria on environmental and social performance

  • GHG intensity and Board gender diversity considerations shall be integrated on the portfolio-level.
  • As the current unclarity about the scope, definition and calculation methodology does not allow for reliable and comparable reporting of the proportion of ‘sustainable investments’ in a portfolio (as defined by SFDR), a criterium based on this indicator cannot be set and thus no minimum proportion of ‘sustainable investments’ is required. A significant proportion will be introduced when there is more legal clarity on the definition and calculation method.

The full text of the 2023 Towards Sustainability Quality Standard can be consulted on the Towards Sustainability website:

About the Towards Sustainability Initiative

In November 2019, the Central Labelling Agency of the Belgian SRI label (CLA) vzw/asbl, awarded the first 'Towards Sustainability' labels to financial products that were compliant with the Towards Sustainability Quality Standard for sustainable and socially responsible financial products.

Since then, more than 780 products, including investment funds, index products, insurance funds and saving products have obtained the label, amounting to more than 500 billion EUR that is managed respecting the criteria of the Quality Standard. About a quarter of these products are distributed on the Belgian market, three quarters in the rest of Europe and beyond, making it the most comprehensive and inclusive labelling initiative for sustainable financial products.

More than 100 financial institutions from over 10 countries are currently involved in the Towards Sustainability Initiative. In just three years, the Towards Sustainability label has become the market standard for sustainable financial products in Belgium and increasingly also in other European countries.

The Towards Sustainability label, like any sustainability label, is necessarily an evolving label. The criteria are regularly reviewed and tightened in order to keep in line with evolving societal needs, investor expectations, scientific insights, available data and the regulatory framework.

The CLA Verifier, which is a partnership of Forum Ethibel, ICHEC Brussels and the University of Antwerp, annually checks whether labelled products meet the conditions of the Towards Sustainability Quality Standard.

For the sustainable investor, the Towards Sustainability label is the beginning of the conversation. The label guarantees that a minimum but ambitious level of sustainability is achieved, and that the product has been subjected to an independent sustainability audit. In addition, it requires the financial institution to be transparent about the specific implementation of its sustainability policy.

With these tools, the investor can search for the sustainable financial product that matches their personal sustainability preferences and convictions, and their broader investor profile.

Label Sustainability is a journey