Tonika Hirdman, managing director of the Fondation de Luxembourg, has encourage responsible investments since the very beginning. Photo: Mike Zenari
The Fondation de Luxembourg, responsible for the philanthropic objectives of investors in the financial centre, has been approved as a signatory of the UN-supported Principles for Responsible Investment, a leading global framework for integrating environmental, social and governance practices in investment strategies
The decision is a recognition of the work of the Fondation de Luxembourg, which has aligned itself with the principles for responsible investment since 2018.
"Since our creation in 2009, we have been investing sustainably," says Tonika Hirdman, managing director of the Fondation de Luxembourg. "So our methodology didn’t really have to change. However, we are now subject to annual reporting in order to give a detailed account of the measures taken to achieve these objectives."
For over ten years, the institution has been creating and managing foundations on behalf of donors who benefit from its structure and experience. Currently, it counts 85 entities with a total amount of funds of around €240m.
Part of this money is invested in projects according to the preferences of the donor: environment, health, fighting poverty, education, etc. Another part is used to invest in financial products in order to find new means.
It was with regards to the latter that Tonika Hirdman’s team had to focus on ensuring that investments were truly responsible. "We had to educate the banking sector to expand their socially responsible investment (SRI) offerings," she says.
She does, however, also point to significant developments at this level since the introduction of the European Commission’s directives calling for greater transparency on the part of companies in the context of responsible investment and the publication of a taxonomy that clearly defines what a responsible financial product is.
The Fondation de Luxembourg has calculated that 80% of its investments meet the standards of socially responsible investments (SRI).
Nevertheless, Hirdman notes that some donors, who entrusted her with setting up and managing their foundation, are not yet open to this kind of investment. "What should be taken into account, however, is that of the 3,600 signatories to the United Nations Principles, there are barely 40 foundations."
So far, few foundations have had the reflex to invest responsibly, whereas the funds committed are often aimed at solving social or environmental problems. "The problem is that in many foundations there is little communication between the investment teams and the teams managing the different causes."
This is, however, not the case at the Fondation de Luxembourg, which has a small team of eight people, ensuring the institution’s proximity and flexibility.
After a year marked by the health crisis that saw the creation of "only" six new foundations, the new year has started rather well with three new projects in the starting blocks.
The Fondation de Luxembourg itself last year created a "Covid-19 foundation" intended to collect donations to finance various projects related to the pandemic. Launched in early April 2020, it has already raised €1.5m. Currently, 87% of the money re-injected were used for causes that directly affect Luxembourg, mainly towards research and social issues.
This article was originally published in French on Paperjam.lu and has been translated and edited for Delano.