Carole Dieschbourg: “We are all part of the problem and we are all part of the solution.”
Is private finance from funds a solution to climate change? Luxembourg’s environment minister thinks so.
Luxembourg’s environment minister has appealed to fund sector leaders to help create a new economic model to protect natural capital and a “new society investing responsibly”.
Speaking at a breakfast event organised by funds labelling service LuxFLAG on 14 March, Carole Dieschbourg said: “The private sector is looking for opportunities for investments. Luxembourg, as a huge financial centre, has opportunities and possibilities to be at the front of a new model.”
Leading by example, Dieschbourg summarised the major environmental issues in Luxembourg saying “we are all part of the problem and we are all part of the solution.”
She then went on to describe the climate change initiatives in which Luxembourg has invested on a local and global level. From clean public transport to energy efficient housing subsidies and sustainable energy generation, she said that the government was confident it could achieve its 40% carbon emission reduction target by 2030. Meanwhile, it has pledged €120m in climate projects overseas under the Paris agreement.
Yet, she said this alone would not be sufficient without a paradigm shift in resource efficiency and climate change and more needs to be done to boost private investment in climate finance.
Luxembourg has already introduced a host of climate finance initiatives, in a bid to position itself as a global centre for green finance, starting with the creation of the special climate finance task force (CFTF) between three ministries in the run-up to Paris 2015. In September 2016, the country saw the launch of the Luxembourg Green Exchange, a platform trading exclusively in green bonds and other environment-focused financial instruments.
The same month, LuxFLAG launched a new climate finance label for funds of which three quarters are invested in activities which mitigate or adapt to climate change. There has also been talk at ALFI of creating an accelerator to create and attract climate savvy fund managers to Luxembourg.
But specifics on how to green the finance industry more generally were in short supply at the talk. One question about tax advantages for investors investing in LuxFLAG-labelled funds proved popular with attendees. However, Dieschbourg was non-committal in her response.
Responding to the minister’s call will not be easy.
A number of obstacles to furthering climate finance in Luxembourg have already been identified by CFTF. These include the lack of viable funds structure in the right manner for impact investors, the shortage of fund managers who are specialised in this sector, and the strict investing requirements and regulatory issues relating to starting a fund.