The LISP label will be granted to insurance products that contribute to the 17 United Nations (UN) Sustainable Development Goals, and in particular to climate transition. It now brings to six the number of labels offered by Luxflag: four "positive impact" labels (microfinance, climate finance, environment, green bonds) and two "sustainable transition" labels (ESG and LSIP).
To be eligible, a product will have to show its credentials. , chair of the Luxflag board of directors, explains that no less than six criteria must be met.
Firstly, the underlying assets in which the life insurance policies are invested - mainly investment funds, as the Luxembourg market favours unit-linked products - will have to meet the conditions for compliance with articles 8 and 9 of the European taxonomy. "This is the basis," explains Voss.
The second criterion is that the insurance product must have a responsible investment process. Thirdly, Insurance products’ investments must also respect the exclusion criteria defined by Luxflag for its other labels. For example, in the fossil fuel sector.
The insurance company itself must also adhere to best practices in corporate social responsibility and justify this to Luxflag. The insurer must also have a policy of transparency and communication for all products.
Finally, the insurance product applying for a label must be subject to the supervision of a regulator, such as the Commissariat aux assurances in Luxembourg.
The label has a natural vocation to be exported.
Although the process is restrictive, it responds to a demand from the insurance sector. "The new and long-awaited Luxflag sustainable insurance product label opens up many positive and promising prospects for the insurance sector and its customers," said , president of Aca, in a press release. For , managing director of Aca, this label has a double advantage: "Avoiding social and greenwashing and responding to the demand of a clientele for whom it is a guarantee of confidence.”
The LSIP is also an asset for the Luxembourg financial centre. "In the Luxembourg life insurance market, 90% of premiums are collected abroad. The label has a natural vocation to be exported,” Hengen explains.
It took the two partners a year to put the project together. And it has found its target. Luxflag labels are awarded to eligible products once a quarter by the board of directors. And in the last promotion, out of the 24 labels awarded, five were to insurance products. These were Generali Espace Lux Vie France, Generali Espace Lux Vie Luxembourg, Smartlife Sustainable, Sogelife Positive Investment France/Monaco and Sogelife Positive Investment Luxembourg.
Denise Voss believes that there is more to come. "Putting together an application for labelling is not something that can be done in a day. It takes time. You have to understand the procedure, prepare the documents and it is a permanent dialogue between the applicants and us. For the next quarter, many of the applications currently being processed will be finalised.”
To date, 365 products have been labelled by Luxflag. These products are managed by 125 financial institutions based in 16 countries and total some €190 billion in assets under management.
This article is part of the Paperjam Finance newsletter, the monthly meeting place for financial news in Luxembourg.