The Grand Duchy has been actively engaged in the microfinance industry since the early 1990s with the establishment of the first Luxembourg microfinance institutions.
Today, almost a third of global MIVs are based in Luxembourg, accounting for more than 50% of the global AuM in MIVs (Directorate for Development Cooperation and Humanitarian Affairs, April 2020).
The financial centre acts as a leading international platform for sustainable finance, supporting a range of activities from responsible investment funds and blended finance to green bond listings and ESG fund labelling.
Luxembourg: A force for good
Luxembourg is constantly expanding its toolbox of products and services designed to promote investment into green and sustainable projects and to help bring sustainable finance into mainstream.
The Grand Duchy of Luxembourg is fully committed to the goal of transforming itself and assisting other markets in their transition to a sustainable global economy. To this end, Luxembourg has established a coherent climate finance startegy with the dual objectives of contributing in a meaningful way to the international fight against climate change and cementing Luxembourg’s role as an international centre for climate finance.
Some of the initiatives include:
- The Luxembourg Sustainable Finance Initiative (LSFI): a non-profit association that designs and implements the Sustainable Finance Strategy for the Luxembourg financial centre. LSFI’s main objective is to raise awareness, promote and help develop sustainable finance initiatives in Luxembourg
- The EIB Climate Finance Platform
This joint initiative with the European Investment Bank (EIB) is designed to mobilise investment for climate related projects by combining a stop-loss guarantee with technical assistance. - The International Climate Finance Accelerator
This public-private partnership provides financial and operational support to fund managers launching innovative climate action funds. - The Amundi Planet Emerging Green One Fund
This joint venture with the International Finance Corporation invests in green bonds emitted by banks in developing countries.
Leader in Responsible and Impact funds
Luxembourg has a strong track record in socially responsible and impact investments, providing the perfect environment for climate finance funds.
Thanks to a tried and tested toolbox of investment vehicles, widely considered the most adaptable in the European marketplace, Luxembourg layered funds have proven particularly effective in projects requiring blended financing from both public and private investors.
Luxembourg has the leading share of European ESG fund assets and 38% market share in terms of total European ESG net flows
Morningstar, Zeb and ALFI (2022)
Almost a third of global MIVs are based in Luxembourg, accounting for more than 50% of global MIV AuM
Directorate for Development Cooperation and Humanitarian Affairs (April 2020)
The Luxembourg Green Exchange: The world’s first and only green exchange
In 2016, the Luxembourg Stock Exchange launched the Luxembourg Green Exchange (LGX), the first global platform dedicated to green, socially responsible and sustainable securities.
The LGX, with its enhanced transparency and reporting standards, channels investment into sustainable projects.
Through stringent eligibility criteria the LGX also contributes significantly to the definition of a global sustainable investment taxonomy.
LGX is the listing venue for Europe’s first social bond issued under the EU SURE programme (LuxSE Oct 2020).
The Luxembourg Green Exchange has the largest marketshare of listed green bonds worldwide
LGX (2021)
Over 3,700 sustainable securities worth EUR 1 trillion
LGX (2024)
European state to issue a sovereign sustainability bond (1.5 bn€)
Sep 2020
By setting strict standards for green securities, LGX aims to create an environment that will allow the market to prosper in a secure and transparent way.”
Financial products labelling by LuxFLAG
The Luxembourg Finance Labelling Agency (LuxFLAG) is an independent and international non-profit association that was founded in 2006 by seven private and public founding partners.
LuxFLAG’s mission is to drive positive change in the international financial landscape by awarding unique labels designed for global use on eligible financial and insurance products.
LuxFLAG Labels are tailored for all financial instruments, reflecting their commitment to fostering a more sustainable and responsible world.
Their global diverse label portfolio can be classified into:
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Impact Labels: Microfinance, Environment, Climate Finance, Green Bonds
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Sustainability Transition Labels: ESG, ESG Insurance Product, ESG Discretionary Mandate
These labels are designed to reassure investors that the financial products they choose adhere to rigorous standards of sustainability, thereby fostering transparency and credibility in the financial sector and to enable them informed investment decisions that align with values and drive positive social and environmental impacts.
"LuxFLAG was established with a clear mandate to encourage and support sustainable finance beyond national and European borders. Our labels are tailored for all financial instruments and intended for global use, reflecting our commitment to fostering a more sustainable and responsible world.”
Philanthropy: putting wealth to work
Wealth can be an incredible leverage to help others. Luxembourg provides solutions to maximise the impact of giving.
The Fondation de Luxembourg is the country’s specialist philanthropy service provider.
The Fondation de Luxembourg is an important asset for the Luxembourg private banking community. By means of an umbrella foundation structure, the Fondation de Luxembourg assists donors in selecting, structuring and managing their philanthropic investment projects. The organisation now covers 93 foundations that engage in projects around the world (FdL 2020).
