Investors and financial services professionals are largely convinced of the strategic role sustainable finance can play in addressing today’s social and environmental challenges. However, despite its growing importance, sustainable finance still faces obstacles such as a lack of available products and, more critically, a shortage of staff adequately trained in environmentally, socially, and governance-oriented (ESG) investments.
In Europe, sustainable finance is governed by a still-evolving legislative framework, including the Taxonomy regulation and its delegated acts, SFDR, and CSRD. Meeting new and evolving requirements calls for teams with robust expertise. The challenge today is to enhance the knowledge of professionals by offering training that is tailored to their needs, such as raising awareness of climate issues, understanding the regulatory frameworks governing green finance, and developing and marketing new sustainable financial products. This is key not only to meet regulatory requirements but also to cater to clients’ sustainaibility preferences.
In recent years, we have seen the emergence of sustainable finance education programmes in various financial centres. These have been developed by professional training organisations, universities, professional associations, and financial sector participants. Thanks to the rise of online programmes, training options have now transcended borders and become very diverse. However, evaluating their relevance to the financial industry’s needs remains a challenge.
Nicoletta Centofanti, CEO of the LSFI
The Training Guide
To simplify what can sometimes feel like a daunting process, the Luxembourg Sustainable Finance Initiative (LSFI) developed a tool in 2022 to map out the available sustainable finance training, both in Luxembourg and neighbouring countries. This matrix, which continues to grow as new programmes are introduced, represents a genuine innovation at the European level. It helps individuals seeking training to navigate their options, identifies gaps in the current offerings, improves programme quality, and aids in selecting the right modules. At present, the LSFI website offers no fewer than 170 training modules (https://lsfi.lu/training/).
For Luxembourg’s financial sector, a European leader in green finance with nearly €3 trillion in assets under management in Article 8 and Article 9 funds (45.7% of the European total) and which is home to the world’s largest platform for sustainable bonds — the Luxembourg Green Exchange (LGX) — the objective is clear: to train professionals that are up-to-speed on ESG issues, mastering new regulations, designing ESG investment products, advising clients on ESG products, evaluating sustainability risks, and measuring the impact of investments.
The range of courses has grown significantly, with ten new courses added in 2023 alone.
Where do we stand currently? “At present, around 40 sustainable finance training modules are available in Luxembourg provided by about ten specialised institutions,” explains Nicoletta Centofanti, CEO of the LSFI. The range of courses has grown significantly, with ten new courses added in 2023 alone. Most of these courses focus on the operational aspects of sustainable finance, such as double materiality, ESG reporting, data challenges and ESG risks.
At the Luxembourg Green Exchange, for example, the LGX Academy offers courses on both traditional sustainable financial products, such as ESG and sustainable funds, and more innovative ones, including gender funds, nature-related sustainable funds, and blue bonds. The academy also covers broader sustainable finance topics like transition finance and greenwashing. The House of Training, on the other hand, offers a course on integrating human rights into finance.
Expanding the Course Offering
In recent years, the LSFI has also helped the financial sector identify which specific skills professionals need in sustainable finance and whether the existing courses meet these requirements. To this end, a working group has evaluated the training market between November 2022 and May 2023.
According to their findings, most available training focused on the fundamentals of sustainable finance and regulatory aspects. However, there were too few courses for client-facing professionals and insufficient training on selling ESG products. “There were gaps, and we’ve highlighted these to the different training organisations,” continues Centofanti. The main deficiencies were in certain subject areas or in training modules not meeting the expertise levels required.
There were gaps, and we’ve highlighted these to the different training organisations.
Following the working group’s analysis, some of these gaps have been filled, and the lack of diversity in the course offerings has already been addressed. Nevertheless, the range of training products remains varied and often difficult to compare. In sustainable finance, the options range from short courses on the basics to a certificate in sustainable finance offered by a university. “What’s important to note is that the offering is abundant and constantly evolving to reflect the changing nature of the sector. Luxembourg has a unique set of expertise, which is reflected in the training available,” confirms Centofanti.
One trend observed is the increasing number of digital courses, alongside a growing willingness among training centres to better meet business needs by offering “on demand” programmes, which provide more flexibility than standardised modules. “This ensures that the offerings stay current and responsive to market needs,” highlights Centofanti.
What’s important to note is that the offering is abundant and constantly evolving to reflect the changing nature of the sector.
Future Directions
Finally, when considering future improvements, Centofanti suggests several ideas that could support the further development and rapid expansion of sustainable finance in Luxembourg and Europe:
- Reduce fragmentation of the offerings, which sometimes forces individuals to pick and choose courses from various providers.
- Establish a general, common training programme for all financial professionals.
- Include a module on sustainable finance in secondary school curricula, as part of a broader financial literacy programme.
- Make it the norm for at least one board member of a company to be trained in sustainable finance.
Training is a key element to further professionalise sustainable finance and ensure its relevance for investors. As a European leader, Luxembourg is committed to ensuring it benefits from the best experts in this field and will continue to implement tools so that both established professionals and new recruits are internationally recognised for their expertise.