The Luxembourg Finance Labelling Agency (LuxFLAG) has announced key changes to the eligibility criteria for its ESG label in its latest update that also notes the addition of another six investment and insurance products falling in scope of its labelling regime.
The latest labelled products include:
- Arkéa Euro Impact Infrastructure Transition Debt 2
- Arkéa Euro Core infrastructure Transition Debt 2
- Arkéa Exclusive Impact Infrastructure Debt
- CapitalatWork Equities Plus Sicav – Equities Plus At Work D
- ECBF I SCSp
- IVO Euro Flexible Short Duration SRI
Available in jurisdictions including Belgium, Estonia, France, Germany, Ireland and Luxembourg, they join the other 240-odd products labelled, representing some €87.3bn of AUM as of Q2 2025. LuxFLAG Labels are awarded for a period of three years and are due for renewal upon expiry.
ESG label
The removal of SFDR classification as a prerequisite to ESG label eligibility is among key updates to the regime intended to simplify and broaden the reach of the labelling regime, and to encourage engagement ongoing by, eg, portfolio managers, in pursuit of ESG objectives.
Among the key changes included in the update are:
- Integration of the ESG Discretionary Mandate Label and its eligibility criteria: The ESG Label now encompasses both investment products and discretionary mandates under a single, unified framework.
- Refined terminology for exclusions and engagement: To facilitate regulatory alignment (eg, with Paris-Aligned Benchmarks), terminology has been clarified.
- Engagement on ESG-related matters is encouraged in the following sectors, unless they fall under exclusion: Coal, Oil & Gas, Electricity Generation, Palm Oil, and Pesticides & GMOs.
- Removal of SFDR classification requirement: Being classified as Article 8 or 9 as per the Sustainable Finance Disclosure Regulation (SFDR) is no longer a prerequisite for being eligible to the ESG label. This adjustment supports LuxFLAG’s global outreach.
- Strengthened ESG due diligence requirement: ESG due diligence must now be systematically integrated into the investment process for 100% of portfolio holdings.
- Clarified instrument-level specifications: A look-through approach applies to fund-of-fund structures.
- Sovereign bonds, use-of-proceeds instruments, and sustainability-linked bonds must be supported by a documented framework.
- Manager commitment to responsible investment: Managers of labelled products are required to be signatories of recognized responsible investment frameworks (eg, UN PRI).
The revised ESG Label criteria are effective immediately and will apply to all new and renewed applications, LuxFLAG stated.
LuxFLAG is an independent non-profit association created in Luxembourg in July 2006 by seven private and public founding partners to support sustainable finance: ABBL, ADA, ALFI, the European Investment Bank, Luxembourg for Finance, the Luxembourg Stock Exchange and the government of Luxembourg. In 2023, ACA became the eighth Charter Member of LuxFLAG
