CSR BY NATURE: TIME FOR A CHANGE OF MINDSET

The label is recognized for its high standards and rigorous evaluation of investment strategies, ESG criteria used and transparency of funds integrated in life insurance contracts. These fundamental criteria are decisive for obtaining the Sustainable Insurance Product Label from LuxFLAG. SOGELIFE Positive Investment has recently obtained the LSIP. On this occasion we met Denise VOSS, President of LuxFLAG and Jean ELIA, CEO of SOGELIFE.

How to describe LuxFLAG’s DNA and missions?

Denise Voss: LuxFLAG is an independent labeling agency founded in 2006, by public and private partners, with the aim of contributing to sustainable development and promoting transparency.  A LuxFLAG label means that a financial product such as an investment fund - and now an insurance product - meets LuxFLAG’s criteria and that it “does what it says on the tin”.

LuxFLAG also promotes education, awareness and the sharing of best practices in sustainable finance, through its Associate Member program. Sustainability has a long history and is a very large topic; there is a lot to learn. But first, the most important thing is to understand the terminology so that we all use the same words in order to better understand each other and progress on the sustainable finance journey.

Why orient labeling towards insurance products?

Denise Voss: Insurance companies are well on their way to implementing the EU Sustainable Financial Disclosure Regulation (“SFDR”), a self-disclosure regulation that requires insurers to disclose sustainability-related information about their own organizations, as well as about the insurance products they make available to policyholders. 

Other EU directives and regulations are also being digested and put into action, including the EU Taxonomy, and amendments of the IDD and Solvency II regimes to integrate sustainability or ESG considerations and factors into key activities, including investment advice, product oversight and governance, risk management and suitability assessment procedures.

As a result, policyholders will be able to purchase and own a growing offer of ESG insurance products, but it is and will continue to be challenging for them and for the insurance industry to identify what is “green” or “sustainable”.

Until the end of 2021, LuxFLAG granted its 5 impact and sustainable transition labels solely to investment funds but given all financial market participants are in scope of the EU sustainable finance regulation LuxFLAG launched a 6th label in December 2021; the LuxFLAG Sustainable Insurance Product label or LSIP for short.  This new label was developed in close cooperation with the insurance industry and is classified as an ESG or sustainable transition label.  As the name of the label confirms, this label is destined for insurance products.

Helping insurers and policyholders make this distinction is the mission of LuxFLAG is an important tool to address “greenwashing” concerns.  Similar to LuxFLAG's ESG label, the LSIP label is for insurance products that assist with the transition to mitigate and adapt to the climate crisis, as well as other environmental and social issues embedded in the United Nations Sustainable Development Goals. Life insurers and wealth managers already get the point, they are already working with a long-term approach, and we have the same goal.

Why did SOGELIFE apply for this new label?

Jean Elia: Labelling our product by LSIP, validates our convictions and our approach towards our clients, particularly with the three dimensions of Socially Responsible Investing (SRI):  

• Exclude investments that operate against “human dignity and nature” ;

• Promote investments in Best in Class ESG Funds ;

• Commit on conviction themes, such as ecological transition, energy transition or social impact.

This product offers the possibility to combine strong ESG convictions with performance and is made up of 100% unit-linked ESG funds, which makes it accessible under all investment management options.

Consequently, with the label, we provide our clients with the certainty that their assets are managed in accordance with strong ESG values. At the same time, we provide our partners with a coherent and sustainable solution that adapts to their needs.

What is the CSR strategy of SOGELIFE? 

Jean Elia: SOGELIFE’s CSR strategy evolves around three main pillars of us being more of:

• a responsible insurer i.e. one that integrates CSR criteria into all the company's activities like when launching a project or a product for example ;

• a responsible employer that promotes quality of life at work and develops a culture of responsibility, diversity and inclusion ;

• a responsible investor who promotes and influences client investments in SRI,  such as in the case of SOGELIFE Positive Investment.

How to convince the whole value chain of wealth management that sustainability is not just a nice to have but the way to the future?

Denise Voss: It’s really a change of mind set, so it will take time. There is a debate that still has to happen, about performance. During the pandemic for example, the ESG funds were more resilient. Sustainable finance gives more tools for investment professionals to make decisions and to monitor those decisions as well. People have to realize that it’s not ESG fund VS non ESG Fund; what we are aiming for is just a fund using a more holistic approach to investing. That is the future new normal: make finance sustainable and have it embedded everywhere. The tone from the top of an insurance company, an asset manager, etc. is so important to moving on this journey.  Certainly, if remuneration was commonly partly based on ESG characteristics maybe we would be moving faster but we’re all doing the best we can and at the end of the day, there is definitely a drive forward; we’re clearly seeing an evolution. 

Jean Elia: Indeed, it will take time, especially in our case where we have a big value chain comprised of the client, the intermediary, the custodian, the asset manager, us the insurer, and sometimes additional stakeholders. To move up on the value chain, we need to be promoters, but also “influencers” of sustainability and push more and more towards these investments. For this, we ought proactive, innovative and patient. According to a study we conducted in 2020, 85% of our partners identified SRI as a product for the future while 37% of our clients, expressed their willingness to invest in them. Nevertheless, among these clients, only a few are ready to invest 100% of their assets in SRI. They still want a “hybrid” solution i.e. a part in SRI and another in more traditional investment. Our conviction though is that the future is going to be in line like our product, 100% responsible. We just have to keep promoting and influencing.

What will be the role of life insurance, in the future of sustainable finance?

Denise Voss: To make the transition to achieve the goals of the European Green Deal, the Paris Agreement and the UN SDGs, vast sums of money are needed.  Clearly much of this will have to come from private sources, so from institutional investors and from individual investors investing in investment funds, insurance products, private wealth management products, etc.

Jean Elia: Sustainable finance and life insurance share the same DNA: long-term vision and preservation and transmission of assets. Life insurance is therefore an enabler for financing a sustainable economy. Our role as life insurers, together with our partners, is to promote and influence sustainable finance, but also to lead by example  the transition towards a more responsible and sustainable world.