Marie-Therese Wich, counsel at GSK Stockmann, set the scene at the EFPA Finance Forum on 13 March 2025 by arguing that “alternative strategies that are more in real assets are more innovative [than traditional strategies in listed markets that include equities or bonds].” However, she acknowledged the former are “usually” only available to certain number of investors.

Sustainability: key theme

Wich reported that 36% of alternative investment funds in Luxembourg are classified as ESG products (Article 8 and 9 funds). She reminded attendees that Article 8 funds promote environmental or social characteristics, while Article 9 funds are sustainable investments. “Article 6 funds are all other funds.” She thinks that the percentage would be higher if there were more data.

Speaking from experience, Wich noted that private equity is the most popular alternative strategy and is often aligned with sustainability by investing in sectors like healthcare to foster health and innovation as per . She thinks that infrastructure, venture capital, real estate (including social housing) and debt funds are also increasingly incorporating sustainability criteria.

Investment, capital and regulation

“There is a huge amount of investment opportunities in the European Union around productivity, energy addition, lower-cost energy and a more sustainable working environment for employees, as well as the potential for greater investment into defence,” said Robert Wall, managing director and head of sustainable private infrastructure at Lazard Fund Managers. Yet he stressed that some of these investments may have “higher technology risk, long duration,” and may not be “well suited to the public markets.”

Wall observed that there is “a real effort” to mobilise personal savings via pension funds or cash at the bank to achieve the EU’s political and geopolitical objectives. He thinks that the only way to mobilise their capital is through “long-term products more suited to alternatives.” At the centre is regulation, which should create a trustful environment whereby “they’re buying what they expect to get--and that’s true in investments but also in ESG outcomes.”

Strategies for sustainability

Wall thinks that those with direct control over investments and specific outcome targets, such as private equity and private debt in real assets and infrastructure, are prioritised at Lazard for their “additionality and impact.” He considers infrastructure companies, with their deep community ties and environmental and social components, to be seen as particularly impactful.

The future of dedicated impact funds is debated, with expectations of growth in emerging markets, but Wall expects limited potential for mainstream institutional and wealth manager allocations.

More generally, Wall suggested viewing ESG not as a purely positive or negative label but as a concept embracing investments beneficial to society, such as renewable energy and waste management.

Regulatory developments

Wich remarked that the European Securities and Markets Authority published guidelines last August aimed at preventing greenwashing so that “a fund that calls itself ESG shall also have an ESG strategy.” She also indicated that the market awaits SFDR 2.0 with much anticipation.

SFDR 2.0 is expected to introduce better definitions for terms such as sustainability and its minimum criteria and new classifications for funds, as Article 6, 8, and 9 may be amended. Wich expects classifications such as “sustainable funds, transition funds, ESG collection and unclassified products.” Additionally, “all the funds that have an ESG element might be also connected to certain minimum criteria and KPIs.”

The package and potential revisions to the corporate sustainability reporting directive, or CSRD, came out in February 2025, and it aims at reducing regulatory burden and costs. Wich expects that only large companies with more than 1000 employees and with more than €50m in turnover may have to comply with the reporting requirements.

Appetite for sustainable investments

Wall thinks that investor appetite for sustainable investments is growing, driven by the rise of retail and wealth management capital seeking diversified portfolios aligned with their values. Yet a moderation in investment strategies is observed, with investors from both traditional and high-tech sectors (climate tech, hydrogen production, storage) converging towards established sustainable businesses such as climate adaptation, as well as waste management.

“It’s a positive, generally, that we’ve seen more recognition of the risk and return, but it does create increased competition for one particular [investment].”