The Luxembourg Fund Labeling Agency (LuxFLAG), a nonprofit organization that certifies the operations of investment vehicles that promote microfinance and environmental initiatives, has approved an environmental label for Parvest Green Tiger Fund, an environmental investment vehicle (EIV) domiciled in Luxembourg, and microfinance labels for the EU Microfinance Platform Fund and Symbiotics (SICAV) SEB (Skandinaviska Enskilda Banken) Microfinance Fund, both microfinance investment vehicles (MIVs). LuxFLAG labels are valid for one year and are subject to renewal upon expiration.
To be eligible for an environmental label an EIV must: (1) have 75 percent of its assets invested in environment-related sectors, (2) screen potential investments for environmental, social and governance (ESG) responsibilities, (3) seek a positive return on investment, (4) comply with the legal and governance criteria of LuxFLAG, and (5) accept supervision from European Union authorities or similar foreign bodies.
To be eligible for a microfinance label an MIV must: (1) have a loan portfolio that is equal to at least half of its total assets, (2) have a minimum of 25 percent of its investments in microfinance institutions (MFIs) rated by a microfinance rating agency approved by LuxFLAG, (3) seek a positive return on investment, and (4) comply with legal and governance criteria of LuxFLAG.
As of April 2014, 27 MIVs hold the LuxFLAG Microfinance Label, representing assets of approximately USD 4.03 billion, and 10 funds hold its Environment Label, representing assets of approximately USD 713 million. Financial information on the three funds recently labeled by LuxFLAG are not available.
By Meraj Husain, Research Associate
About LuxFLAG
The Luxembourg Fund Labeling Agency (LuxFLAG) was established in 2006 to evaluate the activities of microfinance investment vehicles (MIVs), and in 2011 it expanded its mission to include environment-related investment vehicles (EIVs). LuxFLAG’s aim is to “promote the raising of capital for Microfinance and Environment related sectors by awarding a recognizable label to eligible microfinance investment vehicles (MIVs) and environment-related investment vehicles (EIVs).” Its objective is to reassure investors that each labeled MIV and EIV actually invests, directly or indirectly, in the microfinance or environment sector, respectively. LuxFLAG only certifies MIVs and EIVs that are either subject to European Union member state supervision or located in nations with financial supervision on par with countries in the European Union. As of April 2014, 27 MIVs hold the LuxFLAG Microfinance Label, representing assets of approximately USD 4.03 billion, and 10 funds hold its Environment Label representing assets of approximately USD 713 million.
Sources and Additional Resources:
[1] Luxembourg Fund Labeling Agency: “Press Release April 2014,” http://www.luxflag.org/documents/press_releases/2014/LuxFLAG_PR_April%202014.pdf
MicroCapital, April 20, 2013, “Luxembourg Fund Labeling Agency (LuxFLAG) Accepting Microfinance Label Applications Through May 7, Issues Environment Label to BNP Paribas L1 Equity World Aqua,” https://www.microcapital.org/microcapital-brief-luxembourg-fund-labeling-agency-luxflag-accepting-microfinance-label-applications-through-may-7-issues-environment-label-to-bnp-paribas-l1-equity-world-aqua/
MicroCapital, February 26, 2013, “Association of the Luxembourg Fund Industry (ALFI), LuxFLAG Host “Responsible Investing Conference,” May 15, 2013, Luxembourg,” https://www.microcapital.org/microfinance-event-association-of-the-luxembourg-fund-industry-alfi-luxflag-host-responsible-investing-conference-may-15-2013-luxembourg/
MicroCapital, February 14, 2012, “Luxembourg Fund Labeling Agency (LuxFLAG) Awards First Microfinance Label to Azure Global Microfinance Fund, responsAbility Financial Inclusion Fund,” https://www.microcapital.org/microcapital-brief-luxembourg-fund-labeling-agency-luxflag-awards-first-microfinance-label-to-azure-global-microfinance-fund-responsability-financial-inclusion-fund/
MicroCapital Universe Profile: Luxembourg Fund Labeling Agency (LuxFLAG) https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=LuxFLAG
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