Enforcement Actions
Luxembourg’s CSSF issues first-of-its-kind ESG fine to Aviva Investors
• 3 minute read
December 3, 2024
Luxembourg’s financial regulator, the Commission de Surveillance du Secteur Financier (CSSF), has fined Aviva Investors Luxembourg 56,500 euros after an on-site inspection found the fund manager had failed to comply with its stated environmental, social and governance (ESG) investment strategy for five of its sub-funds.
“Aviva Investors Luxembourg is the first investment fund manager sanctioned by the CSSF due to the information communicated in the pre-contractual disclosures, which have been issued pursuant to the Article 8 of the Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services (SFDR),” a CSSF spokesperson confirmed on December 3.
The fine was imposed following a thematic on-site inspection between October 2022 and May 2023, which focused on Aviva’s oversight of its ESG investments.
The sub-funds had been designated Article 8 investments under the EU Sustainable Finance Disclosure Regulation (SFDR). CSSF inspectors found that for a five-month period in 2023, one of them had around 5.5% of its net assets in bonds, which should have been excluded from the fund according to Aviva’s stated investment strategy.
The regulator found the remaining four sub-funds had insufficient systems and controls in place to ensure their investments accorded with the UN Sustainable Development Goals, as represented in the fund prospectus.
Aviva Investors said it had worked with the CSSF to ensure that the regulator’s concerns were swiftly addressed after they were raised.
“The CSSF has confirmed that the remedial actions taken by the management company in updating the prospectus wording and updating its monitoring framework are adequate to address their findings. Specifically, in relation to the EM Bond fund, investors have suffered no financial detriment as a result of the fund holding those bonds which the CSSF consider did not comply with the terms of the prospectus,” it said on December 3.
The five sub-funds were all part of the Aviva Investors’ Luxembourg SICAV range. They were: Aviva Investors Emerging Markets Bond Fund, Aviva Investors Climate Transition Global Equity Fund, Aviva Investors Natural Capital Transition Global Equity Fund, Aviva Investors Social Transition Global Equity Fund, and Aviva Investors Climate Transition European Equity Fund. The latter was closed in 2023.
The CSSF said it visited five investment fund managers as part of its 2022 on-site inspection focusing on “ESG thematic controls”, and has subsequently visited a further three firms to review sustainability controls.