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Institutional investors driving sustainable fund growth in Austria

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The market for funds invested according to sustainability criteria continues to grow strongly in Austria with assets increasing by 12% in 2017.

At the end of 2017 there were 82 funds offered to institutional and retail clients (2016: 66 funds) with a total volume of €7.5bn.

Overall, 16 out of 19 investment companies offering funds in Austria now have one or more funds with a sustainability label.

“Even three or four years ago it was only half of the providers, now almost everyone has it,” said Reinhard Friesenbichler, founder and managing director of RFU Consulting, which specialises in sustainability research.

“It is not a niche anymore but a well established segment,” he told IPE.

A similar growth in assets was reported in 2016 and 2015, indicating that the main source for demand for sustainability funds was Vorsorgekassen, which manage mandatory payments by employers for severance pay.

At year-end 2017 these funds managed €10.4bn in total, an increase of 11% year-on-year – after an 8% growth in assets in 2016.

All of the eight providers in this market have committed to a 100%-sustainable investment policy. Only the criteria differ in each Vorsorgekasse.

Friesenbichler confirmed most of the demand for sustainable funds came from Vorsorgekassen and Pensionskassen, followed by churches.

“But we see a lot of interest from insurers, which will definitely drive demand in the near future,” he added.

More than half of the sustainability funds offered on the market have qualified for the Austrian “Umweltzeichen”. This national environmental label has been around for various products since 1990, and was adjusted for financial products in 2004.

“The ‘Umweltzeichen’ has a high standard compared to other labels and has already become the minimum standard many Austrian investors are expecting,” said Friesenbichler.

Even international investment companies offering sustainable funds on the Austrian markets have applied for the label.

Friesenbichler highlighted the high level of standards in this fund segment, saying: “We do not see ‘green washing’ happening in the market on a larger scale.”

Because of the high standards of the Umweltzeichen, the European label FNG, introduced in 2016, has not really gained much foothold in the Austrian market.

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