One example of how Scandinavia has tackled the issue of defining green investments is by introducing ecolabelling. Different labels and certifications have evolved in fund management, to help consumers make more informed choices. One example is the Nordic Swan label for investment funds. Funds that meet a certain set of criteria can apply for it. The aim of the Swan label is to use the power of capital and ownership to steer companies towards a more sustainable direction. There are 25 investment criteria that involve exclusion of unsustainable companies, inclusion of more sustainable companies, and ensuring transparency.
It does not necessarily give an explanation about the actual environmental impact generated through these investments. But it is a guideline, a starting point. Initiatives like this one and others will hopefully go further in future and provide additional clarity on environmental and social impact as well as consumer benefits.
In 2017, The Swedish Investment Fund Association (SIFA) reviewed the Swan initiative, proposing measures on how ecolabelling for funds can be improved. It’s review
included aforementioned suggestions such as increased transparency and linking to impact.
Ragnar Unge, CEO of Swan highlighted at Almedalen that Swan is a young enterprise. Launched only a year ago, the initiative already included ten major players with 20 funds and approximately 50 billion SEK in its portfolio.
Currently, the EU Commission is in the process of writing a comprehensive study on sustainability
ratings and research as well as defining and implementing an EU sustainability
taxonomy for sustainable investment products. Following the adoption by the co-legislators of the regulation on the EU sustainability
taxonomy, the Commission plans to introduce EU Ecolabels for financial products and explore possible measures to incorporate climate and environmental risks into prudential requirements. This will be in line with the proposed EU taxonomy. The Nordic example and best practices may well serve as a testbed for EU ecolabelling.