“By 2025, investment in the sustainable finance sector will be worth trillions of dollars versus the billions counted today. Luxembourg will contribute to this drive by strengthening its position as a key hub for impact investment and blended finance, thanks to its efficient fund ecosystem and toolbox. The Grand Duchy has already been at the forefront of green finance for several years, with around 35% of assets invested by European investment funds into renewable energy projects managed via Luxembourg investment funds. Luxembourg remains the world’s largest listing venue for green bonds, with 50% of the world’s green bonds listed at the Luxembourg Stock Exchange.
“The taxonomy developed at the EU level provides a further opportunity for Luxembourg’s financial centre to a be a first mover and develop new frameworks for sustainable financial products and be a pioneer in the area of green and climate funds.”
The strategy paper stated:
“As part of a national Sustainable Finance Roadmap, the government will shortly set up a national Sustainable Finance Initiative to coordinate activities and develop a national strategy to further develop Luxembourg’s role as an international platform for sustainable finance. This will take several forms, including incentives for climate related financial services and the development of frameworks for new green financial products in banking, asset management and insurance, notably in the retail space with the aim to further mainstream sustainable finance products. An additional focus will be on investor education on sustainable finance, academic research as well as vocational training for financial services professionals. A new legal framework for green covered bonds is a further illustration of how Luxembourg develops its product range in this sector with the aim of helping to raise capital for sustainable projects.”
“Thanks to its efficient fund ecosystem and toolbox, including the possibility to set up layered funds, Luxembourg is today a key hub for blended finance, leveraged amongst others by numerous multilateral and development banks. Together with the [European Investment Bank], the Luxembourg government also set up a dedicated climate finance platform in this context. Blended finance is indeed an ideal tool to help de-risk investments, including in the area of climate finance, and thus encourage private investors’ uptake. Further strengthening Luxembourg’s role as hub for blended finance, and more generally supporting the development of innovative financing mechanisms involving the public and private sectors are additional priorities.”
The report also called out five other axes:
“By 2025, Luxembourg’s ambition is to further expand its role as a cross-border centre of excellence and EU hub.”
Act as a “complementary hub” for other European financial markets, particularly in the investment fund and wealth management spaces.
Take advantage of digitalisation, such as the EU’s newish PSD2 “open banking” rules and tokenisation technologies.
“A key commitment for the next 5 years is to ensure compliance with international standards and continue to provide international investors with the highest possible standards of protection.”
Improve attractiveness for the country’s international workforce.