Towards Sustainability label: looking back at 2023

Highlights

• 91 investment, savings and insurance products have been awarded the Towards Sustainability label in 2023, bringing the total of labelled products to 792
• 525 billion euros are managed in line with the criteria of the Quality Standard, embodied by the label. An estimated 25% of that amount is distributed in Belgium.
• Revised criteria of the Quality Standard to step up the ambition of the label once again announced in June 2023
• 85% of currently labelled products have applied for renewal within the revised and levelled up label to be granted in June 2024
• In addition to the already labelled products, 42 products have applied for the first time despite the stricter new criteria.

The Towards Sustainability label aims to grow and safeguard the quality and integrity of the market for sustainable financial products and to provide more transparency and clarity to retail and institutional investors. In just four years, the Towards Sustainability label has become the market standard for sustainable financial products in Belgium and increasingly in Europe.

The year 2023 also marked the second revision of the Quality Standard. The criteria are regularly reviewed and tightened in order to keep in tune with evolving societal needs, investor expectations, scientific insights, data availability and regulatory framework. Under the new guidelines, investee companies involved in the exploitation or development of new oil or gas fields are excluded, among others. Towards Sustainability was the first broad EGS-label to set such a stringent requirement, prompting others to follow suit. Other notable changes pertain to the integration of GHG-intensity and board gender diversity performance at portfolio-level, corporate engagement and voting, and the impact of ESG-strategies. The revised criteria will come into effect in January 2024 for newly labelled portfolios and in June 2024 for currently labelled portfolios.

Prospects for 2024

Amid growing concerns about greenwashing, the European Commission has launched a consultation for the review of the Sustainable Finance Disclosure Regulation (SFDR) to look at issues such as legal certainty and usability. Moreover, the EU’s financial markets regulator and supervisor (ESMA) is currently reviewing the guidelines for funds’ names to make sure that the use of ESG or sustainability-related terms is not misleading about the genuine characteristics of a fund.

Tom Van den Berghe, Managing Director CLA: “The discussion around the adequacy of the EU framework shows once again the relevance of a label such as Towards Sustainability, that goes beyond the sole disclosure obligation, by setting clear, transparent and evolutive minimum criteria combined with an independent verification.”

As of 2024, the revision process will evolve to a more targeted approach focussing on specific sustainability issues. The new approach will be based on multistakeholder consultations and workshops about a selected number of topics such as biodiversity, private equity, real estate, defence industry.

Transparency and clarity for the investor

The Towards Sustainability label focuses on transparency and the provision of relevant and helpful information. A user-friendly online search tool provides a clear and comprehensive sustainability ID for each labelled product, to help investors find a product that is in line with their personal sustainability preferences and convictions.

Independent supervision and verification

The Towards Sustainability label contributes to the fight against greenwashing, by establishing a minimal but ambitious level of sustainability. Its strong independent control mechanisms protect the integrity of the label. The CLA has appointed an independent Verifier to assess through analysis of investment policies, on-site audits, and ongoing portfolio monitoring, whether all products meet the conditions of the Towards Sustainability Quality Standard. Currently, the Verifier is a consortium consisting of Forum Ethibel, ICHEC Brussels and the University of Antwerp.