So, you hear about green finance everywhere, and where does this Greenfin label come from? Basically, it’s a sort of governmental « quality label » for investments that are genuinely making an effort for the planet. No more greenwashing, we want concrete action! This article will shed light on what this label really means, how it works, and why it might interest you if you want your money to contribute to something positive for the environment. We’ll look together at what makes a fund « green » according to Greenfin, what is forbidden, and what it means for you, the saver.
Key takeaways about the Greenfin label
- The Greenfin label is an official certification from the French government that guarantees an investment fund concretely supports the ecological and energy transition.
- To obtain this label, funds must invest in very specific « eco-activities » (such as renewable energy or low-carbon building) and exclude polluting sectors like fossil fuels and nuclear power.
- The labelling process is quite strict, with audits carried out by independent organisations to verify that the funds comply with the defined criteria.
- While ambitious, the Greenfin label allows for a small portion of investment in less green sectors (the « diversification pocket »), which can sometimes limit the fund’s overall environmental impact.
- For savers, the Greenfin label is a reliable way to identify investments that are genuinely committed to the planet, while benefiting from the expertise of fund managers.
Understanding the Greenfin label: a guarantee of green finance
Definition and origin of the Greenfin label
The Greenfin label is a bit like a medal awarded by the French State to recognise investment funds that are making a concrete effort for the environment. Launched in 2019 by the Ministry of Ecological Transition, it aims to distinguish financial investments that actively support the ecological transition and the fight against climate change. Essentially, it’s a way to help savers identify investments that don’t just talk about ecology, but that actually act. It’s a governmental initiative that is part of a broader approach to responsible finance, ensuring that the money we invest can have a positive impact on the planet.
The main objectives of the Greenfin label
The Greenfin label was created with a few clear ideas in mind. Firstly, it aims to direct a portion of savings towards an economy that consumes less carbon. Secondly, it wants to encourage investors to finance projects that help the ecological transition. Finally, and importantly, it seeks to make green funds more visible and more reliable for everyone. The idea is simply to make finance greener.
The Greenfin label as a transparency tool
In the world of finance, it can sometimes be difficult to know where our money is really going and what impact it has. The Greenfin label acts as a beacon in this complexity. It offers a guarantee that the funds bearing it comply with strict environmental criteria. This allows savers to make more informed choices, knowing that their money is invested in companies and projects that contribute to a more sustainable future. It’s a way to make finance more transparent and more responsible in the face of current ecological challenges.
Eligibility criteria for the Greenfin label
For an investment fund to proudly bear the Greenfin label, it must meet a set of precise rules. These rules are designed to ensure that the money invested genuinely supports the ecological and energy transition. It’s not just a matter of good intentions; there are concrete criteria to be met.
Eco-activities to prioritise
The core of the Greenfin approach is to invest in companies that are doing concrete things for the environment. The label has defined eight main categories of « green » activities in which funds must concentrate their investments. Think, for example, of renewable energy, energy efficiency in buildings, or sustainable waste management. There’s also clean transport, technologies that help the environment, responsibly managed agriculture and forestry, and finally, activities that help adapt to climate change.
- Energy: Renewables, energy efficiency.
- Buildings: Low-carbon construction, energy renovation.
- Waste and pollution: Reduction, recycling, sustainable treatment.
- Industry: Clean technologies, sustainable practices.
- Transport: Sustainable mobility, electric vehicles, public transport.
- ICT: Information and communication technologies for the environment.
- Agriculture and forestry: Sustainable agriculture, agroecology, responsible forest management.
- Climate adaptation: Solutions for adapting to changes.
Excluded investment sectors
Conversely, the label is very clear about what it does not want to finance. Certain sectors are simply banned. This includes fossil fuels (coal, oil, gas) and nuclear power. But that’s not all. The label also excludes companies involved in activities deemed controversial, whether environmentally or ethically. For example, incineration plants without energy recovery, landfills without greenhouse gas management, or unsustainable logging operations cannot receive funding from a Greenfin fund if these activities represent a significant portion of their turnover (more than 30%).
Integration of ESG criteria
Beyond green activities and exclusions, a Greenfin-labelled fund must also integrate Environmental, Social, and Governance (ESG) criteria into its strategy. This means that the fund manager must actively monitor ESG controversies that could affect the companies in which it invests. They must be able to react, for example, by excluding or reducing their stake in a problematic company. This is a more comprehensive approach that shows that green finance doesn’t stop at the environment alone, but takes into account all of a company’s impacts.
The Greenfin label requires in-depth analysis of companies, not just on their core business, but also on their overall responsible behaviour. This is what gives it its strength and credibility with savers concerned about the impact of their money.
The Greenfin labelling process
Obtaining the Greenfin label is a bit like passing a rigorous exam to prove that an investment fund is truly doing its part for the planet. It’s not just a small box to tick; there’s a real process behind it. The process is quite structured and aims to ensure that labelled funds genuinely meet the commitments of green finance.
Eligibility verification and initial analysis
First and foremost, the management company wishing to obtain the label must ensure that its fund is on the right track. It then chooses an independent certifying body, such as Novethic, EY France, or Afnor Certification. It is to this body that it submits a detailed description of its activities: how the portfolio is constructed, what the management strategy is, what internal controls are in place, etc. The organisation then carries out an initial analysis to see if the application is admissible. If everything is in order, a contract is signed between the management company and the certifying body, and we can move on to the next step. This is a fairly technical stage, requiring careful preparation of the application.
Validation of compliance with criteria
This is the core of the process. Here, it is verified that the fund complies with the four main conditions defined by the Greenfin framework. First, there are the exclusions: the fund must not invest in sectors such as fossil fuels, nuclear power, or activities that pose major ethical or environmental problems. For example, companies whose turnover is significantly derived from these sectors are excluded. Conversely, the fund must invest a significant portion of its capital in what are known as « eco-activities ». The framework lists eight: energy (especially renewable), buildings (low-carbon), waste management and pollution control, industry (clean technologies), clean transport, information and communication technologies, agriculture and forestry (sustainable), and adaptation to climate change. The structure must also take into account ESG (Environmental, Social, and Governance) criteria in its investment choices. This involves active monitoring of controversies and adaptation of the portfolio strategy. Finally, the fund must be able to measure its positive impacts on the climate and the environment, for example, through its carbon footprint or its contribution to biodiversity. Compliance with these four pillars is essential to obtain the label.
Audit and award of the label
Once the management company has demonstrated compliance with the criteria, the certifying body proceeds with the audit. This involves an in-depth analysis of the documents provided and interviews with the management teams. Following this audit, a report is drawn up. It is on the basis of this report that the organisation decides whether or not to award the Greenfin label. If the label is granted, it is valid for one year and is renewable. During this period, the fund is subject to regular checks to ensure that it continues to meet the requirements. This is a guarantee of ongoing monitoring and seriousness for savers seeking investments aligned with the ecological transition.
The Greenfin labelling process is designed to be transparent and rigorous. It aims to distinguish funds that are genuinely committed to green finance, going beyond mere statements of intent. Regular audits ensure that a high level of requirement is maintained throughout the label’s lifespan.
Sectoral exclusions of the Greenfin label
Exclusion of fossil fuels and nuclear power
The Greenfin label aims to be a true marker of green finance, and this involves clear choices about the sectors in which not to invest. One of the most significant exclusions concerns fossil fuels. In concrete terms, this means that Greenfin-labelled funds cannot invest in companies involved, directly or indirectly, in the extraction, production, transport, or distribution of fossil fuels. This is a strong stance to ensure that invested money genuinely supports the energy transition and not the energies that hinder it.
Until early 2024, nuclear power was also completely excluded. However, following a re-evaluation of the criteria to better align with the European taxonomy, nuclear power has been reintroduced as an eligible activity. This decision shows a willingness to adapt the label to regulatory and scientific developments, while maintaining a strict environmental direction.
Exclusion of controversial activities
Beyond fossil fuels, the Greenfin label lists activities deemed problematic for the environment and society. Labelled funds must ensure they do not invest in companies whose main activity, beyond a certain threshold (often 30% of turnover), is related to:
- Waste storage or landfill sites that do not capture greenhouse gases.
- Incineration of waste without energy recovery.
- Energy efficiency applied to non-renewable energy sources, or optimisation of fossil fuel extraction and transport.
- Unsustainable logging and peatland agriculture.
These exclusions aim to prevent the financing of practices that have a direct negative impact on climate and biodiversity. It is important to note that the label also excludes investment in companies that provide equipment or services to these excluded sectors. This is a comprehensive approach to ensure the coherence of labelled funds with sustainable development objectives.
Impact of exclusions on sustainable finance
The sectoral exclusions of the Greenfin label are not insignificant. They force fund managers to be more creative and rigorous in their asset selection. Rather than simply applying general ESG criteria, the label imposes a clear vision of what is considered an activity beneficial to the ecological transition.
These exclusion policies are essential to distinguish genuine green finance from mere « greenwashing ». They ensure that Greenfin-labelled funds do not finance, even indirectly, activities that run counter to climate objectives.
For savers, this means greater confidence that their money is genuinely contributing to environmental solutions. It also pushes the entire financial industry to review its practices and offer products more aligned with ecological challenges.
The interest of the Greenfin label for savers
For you, who have savings to invest and care about the impact of your investments, the Greenfin label offers several concrete benefits. It’s not just a trendy label, but a real guide for those who want their money to contribute to something positive for the planet.
Identifying funds committed to the ecological transition
The main advantage of the Greenfin label is that it helps you see clearly. In the world of finance, there’s a lot of talk about « green, » but it’s not always easy to know what’s really serious. Greenfin is a state label, which gives it particular weight. It is awarded by independent organisations after a thorough verification of the funds. When you see this label on a financial product, you have a good indication that this product supports activities that concretely help the ecological transition. It clearly excludes problematic sectors, such as fossil fuels or nuclear power, and focuses on areas like renewable energy, energy efficiency in buildings, or clean transport. It’s a simple way to distinguish funds that make a real effort for the environment from those that are just « greenwashing ».
Benefiting from the expertise of managers
Investing through a Greenfin-labelled fund often means going through asset management professionals. These managers have dedicated teams for analysing companies and projects. To obtain and retain the label, they must not only comply with strict environmental criteria but also demonstrate that they have a clear strategy for identifying and selecting the best opportunities in eco-activities. This means they do the research and analysis work for you. They are expected to have a better understanding of the markets and companies contributing to the transition, which can potentially lead to better performance, while remaining aligned with your values.
Contributing to a greener economy
Beyond the financial aspect, choosing a Greenfin-labelled fund is a civic choice. Your money, instead of financing activities that harm the environment, will support companies and projects that are seeking solutions to climate challenges. It’s a concrete way to participate in the transformation of our economy. Even if the amount invested by a single saver may seem small, the cumulative effect of thousands of investors choosing responsible funds can have a significant impact. It sends a strong signal to companies and financial markets: the demand for more sustainable finance is there, and it is growing.
Limitations and specificities of the Greenfin label
The authorised diversification pocket
The Greenfin label, while ambitious, has certain specificities that are good to know. One of these concerns the « diversification pocket ». The regulations allow management companies to include a portion of the portfolio that is not directly focused on the defined eco-activities. In concrete terms, this means that a portion of the funds can be invested in companies where less than 10% of turnover comes from green activities recognised by the label. For equity funds, this portion can be up to 25% of the portfolio. Although some management companies choose not to use this flexibility, its existence can potentially dilute the fund’s overall environmental impact. It is therefore important to check whether the fund manager makes use of this possibility.
Comparison with other responsible finance labels
The Greenfin label stands out for its strict environmental focus, particularly its sectoral exclusions. Unlike the SRI (Socially Responsible Investment) label, which integrates ESG (Environmental, Social, and Governance) criteria more broadly, Greenfin focuses specifically on the ecological transition. Other labels, such as Finansol, emphasise solidarity savings and social impact. This specialisation makes Greenfin a precise tool for identifying funds truly committed to combating climate change, but it also implies a more targeted investment universe.
- Greenfin: Strict environmental focus, strong exclusions (fossil fuels, nuclear).
- SRI: Broader ESG approach, fewer climate exclusions.
- Finansol: Priority on social and solidarity impact.
It is essential to understand that each label has its own philosophy and level of requirement. Greenfin is one of the most demanding in environmental terms, but this does not mean it is the only relevant label for responsible savings.
The restricted investment universe
Due to its strict criteria and its focus on the 8 defined eco-activities, the Greenfin label limits the investment universe of funds. This can lead to less diversification compared to more generalist or less restrictive funds. Similar companies are often found from one Greenfin fund to another. This concentration can be seen as a strength, guaranteeing a strong commitment, but it can also be a limitation for savers seeking maximum diversification. The 4a39 label aims to promote sustainable investments by ensuring that financed activities align with environmental protection and climate change mitigation objectives.
In conclusion: Greenfin, a boost for greener finance
So, we’ve covered the Greenfin label. It’s clear that this label is a way for the government to help us identify funds that are genuinely making an effort for the environment. It excludes dodgy things like oil or nuclear power, and it highlights those working on green projects. It’s not perfect; we’ve seen that there’s a little leeway for funds, but frankly, compared to others, it’s already quite good. For us savers, it provides more visibility and helps us invest our money where it truly matters for the planet. It doesn’t solve everything, but it’s a step in the right direction to ensure our money is used for something more constructive.
Frequently Asked Questions about the Greenfin Label
What is the Greenfin label and why was it created?
The Greenfin label is like a special medal for financial investments that genuinely help the planet. It was launched in France to help people easily find investments that support sustainable development. The idea is to ensure that money goes towards projects that protect the environment, such as renewable energy or ecological construction, and not towards polluting activities.
What types of activities do Greenfin funds finance?
Funds with the Greenfin label focus on what are called ‘eco-activities’. Think of everything that’s good for the Earth: producing clean energy (like solar and wind), building homes that use less energy, managing waste intelligently, developing less polluting transport, or using technology to help the environment. It’s a bit like choosing to plant trees instead of cutting down forests.
What sectors are absolutely forbidden for a Greenfin fund?
To ensure that money goes to good causes, the Greenfin label says no to certain sectors. The most important ones are fossil fuels (oil, gas, coal) and nuclear power. It also refuses to finance activities that cause problems for society or the environment, even if they are not directly related to energy, such as certain types of manufacturing or exploitation that are not respectful.
Are all investments in a Greenfin fund 100% green?
Not exactly. The Greenfin label is quite strict, but it allows a small portion of the money (sometimes up to 20% or 25% depending on the case) to be invested in companies that are not entirely « green » or that have less ecological activities. This is called a « diversification pocket ». It allows funds to be a bit more flexible and potentially more profitable, but you should be aware that a small part of the money may go into less exemplary sectors.
How can I know if a fund really has the Greenfin label?
To be sure, you need to check if the fund is officially recognised. The label is issued by independent organisations recognised by the state, such as Novethic, EY France, or Afnor Certification. These organisations verify that the fund complies with all the rules. You can usually find a list of labelled funds on the official government websites or those of the certifying bodies.
Why choose a Greenfin-labelled fund over another label?
The Greenfin label is particularly interesting if your absolute priority is to support the ecological transition and combat climate change. It is more specialised in environmental issues and has stricter exclusion criteria than some other labels, such as the SRI label which also looks at social and good governance aspects. If you want to be sure that your money supports truly green projects and avoids polluting energies, Greenfin is an excellent choice.
