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  1. Investment funds and investment products 101

Investment funds and investment products 101

The Nordic Swan Ecolabel gives consumers guidance to funds that have taken on the role of influencing companies to act more sustainably. All the Nordic Swan Ecolabelled fund has to do is

  • opt out the worst companies and industries
  • opt for more sustainable businesses, and 
  • act transparently. 

In doing this the Nordic Swan Ecolabelled fund will influence companies to act more sustainably on a long term.

Learn more about funds on our Investment Fund site

Regardeless if you are an investor that wants to invest your money in sustainable funds or of you are a fund provider who wants to Nordic Swan Ecolabel your fund, you will find lots of information on our fund site.

  • Fees valid from 6 May 2020

    The criteria document for funds is an overall document for the commodity groups:

    • Investment funds
    • Investment products

     

    Fees are charged per commodity group according to the price list below.

    Application fee

    Application fee including one on-site inspection within the Nordic countries

    3 000 EUR (per fund) excl. VAT.

    Index funds:
    2 000 EUR (per fund) excl. VAT for index funds that base their application on an index that has been pre-evaluated and approved by Nordic Ecolabelling.

    Index providers and investment products:
    125 EUR per hour excl. VAT.

    Renewal fee 1 500 EUR (per fund) excl. VAT.

    Annual licence fee

    Annual Nordic licence fee The annual licence fee is based on the size (AUM*) and the ongoing charges of the fund.

    The licence fee is determined by calculating the average AUM held by Nordic unitholders (during the period of the year when the fund has had a valid Nordic Swan Ecolabel license). VAT is added.

    Ongoing charges of fund | Licence fee
    ≥ 1.00%   0.0015% of AUM
    <1.00 %   0.0014% of AUM
    <0.80%    0.0013% of AUM
    <0.60%    0.0012% of AUM

    * Assets Under Management

    Annual fee, index providers 1 500 EUR (one-day inspection) + travel costs. Please refer to "Fees for on-site inspections". If more than a working day is required for the inspection, an extra fee of 125 EUR per hour is charged.
    Annual fee, Investments products 2 000 EUR + travel costs.
    Minimum fee for a Nordic fund licence 1 500 EUR per year excl. VAT.
    Maximum fee for a Nordic fund licence 10 000 EUR per year excl. VAT and 100 000 EUR per group, at a minimum 2 000 EUR per fund.

    NB! Funds can also be marketed with the Nordic Swan Ecolabel outside the Nordic countries. The licence fee for funds is based on the AUM that Nordic unitholders hold in the Nordic Swan Ecolabelled fund.

    Fees for extensions/alternation of the licence

    Extension/alteration of existing licence Fees will be charged according to how long it takes to deal with the matter:
    - Less than 4 hours: 375 EUR excl. VAT
    - Between 4 and 8 hours: 750 EUR excl. VAT
    - More than 8 hours: 1 500 EUR excl. VAT

    Fees for on-site inspections

    Extra fee for additional on-site inspection within the Nordic countries 500 EUR excl. VAT per visit
    On-site inspection outside the Nordic region, but within Europe *) 1 500 EUR excl. VAT per visit
    On-site inspection outside Europe *) 2 500 EUR excl. VAT per visit

    *) There is an extra fee of 1 000 EUR per day, if the inspection takes more than one day.

  • Information on the latest version of the criteria for investment funds

    1.2 ⇛ 1.3: Extention of criteria

    Nordic Ecolabelling decided on the 6 May 2020 to extend the criteria to include investment products investing in Nordic Swan Ecolabelled investment funds. The new version is called 1.3.

    1.1 ⇛ 1.2: Prolongation of the validity of the criteria

    Nordic Ecolabelling decided the 22 Februari 2020 to prolong the validity of the criteria to the 30 June 2022. Furthermore, an adjustment of requirement O6 was made. The new version is called 1.2.

    1.0 ⇛ 1.1: Adjustment of criteria

    The Nordic Ecolabelling Board decided on 14 March 2018 that qualified non corporate green bonds can be included when the applicant shows that the fund can apply for a license. The new version is called 1.1.

    1.0: Adoption of criteria

    The Nordic Ecolabelling Board decided on 14 June 2017 to adopt criteria for investment funds. Version 1.0 is valid until 30 June 2020.

     

  • How to apply for the Nordic Swan Ecolabel

    We are happy to guide you through the application process. Below you can find a general description of what the process looks like – all the way from initial thoughts to an approved license.

    It is also possible to apply for the Nordic Swan Ecolabel in the process of launching a brand-new fund. If you wish to market a Nordic Swan Ecolabelled fund from the date of inception, it is important to contact us as soon as possible in the planning phase.

    These three factors are important to take into account from the start if you are considering an application:

    • The investment fund must be covered by the UCITS regulations
    • The investment fund must be registered for distribution in at least one of the Nordic countries
    • The investment fund must invest at least 50 % of its assets in equities, corporate debt and/or non-corporate green bonds that fulfil certain additional criteria

    If the fund meets the above, the application process is as follows:

    1. The fund must fulfil 25 obligatory requirements and collect at least 6 points (5 points for bond funds) from a range of points-score require. Download the full criteria document, read it carefully and evaluate the prerequisites of your fund. It is particularly important to study how compliance with the individual requirements should be documented (the texts marked with an envelope at the end of each individual requirement).
    2. Naturally, there are different ways of documenting that the fund fulfils all requirements. At this stage we recommend that you contact us for a discussion about suitable documentation for your product.
    3. After this first meeting you are likely to have a sense of whether the fund can fulfil the requirements. Reach out to us again so that we can arrange user credentials to our online application portal. We will also happily give a demonstration of how to use the portal in addition to this instructional video.
    4. Collect and send the documents that are needed to evaluate whether the requirements are fulfilled.
      • All documents are uploaded to the application portal where they also can be linked to individual requirements. Please name all documents in a clear manner and note that the same document often can be designed so that it meets several requirements.
      • Moreover, keep in mind that you probably will need to contact your service providers in one way or the other and also involve them at an early stage to make the application process as smooth as possible. This is particularly true for index funds, which can base their application on an index that has been pre-evaluated by Nordic Ecolabelling.
      • There is no need to send all documents in one batch. You may deliver documentation on just some of the requirements when you start filling out the online application. Our evaluator will provide feedback as soon as possible. Please note that the fund is approved when all individual requirements are fulfilled. 
    5. When all documents are in order, our evaluator will conduct an on-site audit of your company.
    6. Done! The fund has now been approved and can be marketed with the official Nordic ecolabel, the Nordic Swan Ecolabel. Towards the end of the process we will also engage in a dialogue about marketing preparations before launching the Nordic Swan Ecolabelled fund.

    How long does it take to get a Nordic Swan Ecolabel licence?

    Be well in advance with your application, preferably at least 6 months before you wish to receive your licence from us. If you have never had a Nordic Swan Ecolabel licence before, it is advisory to plan for an even longer application process, and we recommend that you contact us for a joint planning of the process.

    Application valid for one year

    If the applicant company does not actively work with its application, Ecolabelling Sweden, after one year, has the right to decline it.


Q&A on Nordic Swan Ecolabelled funds

There are lots of questions about Nordic Swan Ecolabelled funds. Why has Nordic Ecolabelling chosen to ecolabel investment funds in the first place? What requirements must be fulfilled? How are the funds evaluated? What companies are allowed in a Nordic Swan Ecolabelled fund? What companies are NOT allowed? Below you can find a comprehensive Q&A about Nordic Swan Ecolabelled funds.

  • The current production and consumption patterns in our world are not sustainable. Nordic Swan Ecolabelling is convinced that funds have an important role to play in influencing companies to work more sustainably, as funds control significant capital assets.

    There is a strong demand for an independent and reliable evaluation of funds, both among consumers and investors. A Nordic Swan Ecolabelled fund represents a sustainability-labelled alternative for savers and professional investors, and an instrument for fund management companies to show that their funds fulfill stringent requirements.

  • When many savers, professional investors, and fund managers join forces to exert influence, we are convinced it will have an effect. Nordic Swan Ecolabelled funds have good opportunities to exert influence by:

    • providing markets with a clear stance on which sectors and companies that are not sufficiently sustainable.
    • requiring sustainability data for analysis and for investing a majority of assets in companies with strong sustainability activities
    • openly reporting the fund's holdings every third month.
    • openly reporting annually on the fund's sustainability work.
    • practicing active ownership by voting and being in direct dialogue with companies.
  • The Nordic Swan Ecolabel for investment funds builds on four ways in which funds can influence companies:

    Exclusion: The fund must refrain from investments in selected industries and companies that are furthest from sustainable. Read more about our exclusion requirements here.

    Inclusion: The fund must conduct a thorough ESG analysis of possible investments and select better companies from a sustainability perspective. Read more about our inclusion requirements here.

    Transparency: The fund must regularly report on its actual holdings and publish an annual report on the sustainability activities of the fund.

    Active ownership: Nordic Ecolabelling encourages funds to be active owners, which include voting at annual general meetings and engaging with portfolio companies. This is a points-score requirement, as it is not always relevant to exercise active ownership.

    The fund must fulfill 25 obligatory requirements. In addition to these, the fund needs to collect a minimum of 6 out of 16 points from various points-score requirements (5 out of 16 for bond funds).

  • In conjunction with the application, Nordic Ecolabelling inspects the fund manager on-site. The manager must document clear processes for how companies are disregarded and selected in accordance with the Nordic Ecolabelling requirements. They must also document and show that the requirements concerning transparency and active ownership are fulfilled. During the evaluation process, data used for calculations, as well as environmental, social and governance (ESG) analysis reports and other relevant documentation confirming compliance with the requirements, must be presented for examination. Nordic Ecolabelling performs an on-site inspection as a part of the licensing process and make regular controls during the licence period.

  • No. A Nordic Swan Ecolabelled fund must exclude companies and industries that are furthest from sustainable and the fund must invest a majority of its assets in companies with a strong performance on sustainability. This does not mean, however, that all holdings of a Nordic Swan Ecolabelled fund will be perceived as “sustainable”.

    Nordic Ecolabelling does not review and assess every company in a fund. Instead, we set up rules for how the fund manager should think, analyze and assess. In this way, the most problematic companies are avoided, and many of the “best” ones are selected. We are also convinced that we can achieve an effect by applying our requirements of analysis, transparency and active ownership. Moreover, it is possible to collect points by investing in companies operating in “green” industries such as renewable energy, energy efficiency, waste management, and organic agriculture.

  • In that case, the fund manager must either sell the holding or notify how they intend to handle the situation to influence the company. Information must be published on the fund's website within three months, with details of how the fund management company assesses the situation, what they will do to influence the company, which results it is possible to achieve, and when the situation can be expected to be resolved. If the fund manager does not manage to influence the company to rectify the situation, the holding must be sold off within 24 months.

    A strategy of selling dubious holdings directly can sometimes have adverse effects. Retaining and engaging with the company instead may even yield more constructive results.

  • The Nordic Swan Ecolabel can be awarded to funds that, in a credible and well-documented manner, can present a robust methodology meeting all requirements set by Nordic Ecolabelling. An index fund is designed to track the performance of a market index as closely and cost-efficiently as possible. Index funds can meet the requirements of Nordic Ecolabelling by investing in an index that selects companies in line with the criteria.

  • Yes, but the maximum share of indirect holdings that lack a sustainability analysis is restricted to 5 % of the fund, as an important purpose of Nordic Swan Ecolabelled funds is to influence companies in a more sustainable direction. A larger ratio of indirect holdings is permitted if it is ensured that these holdings also fulfil all other requirements.

  • Nordic Ecolabelling sets a requirement that the fund must be transparent with all holdings. On its website, the fund manager must report which shares and bonds are held in the fund and update the information once a quarter. At least once a year, the fund management company must present a report describing the sustainability activities of the fund. For example, how the fund has excluded, included, voted, and conducted dialogue with companies in which the fund holds shares.

  • Nordic Ecolabelling has no requirements related to the fund's return or risk profile. But in the long run, we are convinced that investments with a sustainability profile will be worthwhile.

Contact us for more information