Luxembourg Fund Governance Survey 2020

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ESG, cybersecurity, and board diversity increasingly important topics for boards.

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19/01/2021 |
  • OLIV7989-OlivierToussaint-13-03-19

PwC Luxembourg, together with the Institut Luxembourgeois des Administrateurs (ILA), is pleased to introduce the latest edition of this Luxembourg Fund Governance Survey.  This is the 10th edition of the survey, which gathered insights from the boards of 122 investment fund and management companies covering both liquid and alternative products. This record number of participants gives clear evidence of the continued attention to governance given by market participants.

The aim in preparing this survey is to provide boards with insights into current good governance practices and to further strengthen the overall governance framework of the Luxembourg fund industry. The Luxembourg asset management industry is very active in providing practical guidance to board members as evidenced by the numerous publications, events and courses developed by both ILA and ALFI, several of which are referenced in the results to the survey.

This year’s survey reveals that governance practices continue to evolve across the Luxembourg fund industry, with ESG, cybersecurity, and board diversity outlined as increasingly important topics for boards to address in the coming years.

Michael Delano, ILA Fund Committee Chairman and PwC Luxembourg Partner said:

“The importance of this survey exercise is heightened in the current environment. The industry continues to experience deep transformations in the face of various concomitant factors – continued intensification of regulatory oversight, the current impact of the COVID-19 pandemic, and a post-Brexit environment that still needs to be defined.

This year’s survey explores two new topics that will have lasting impacts on Luxembourg’s fund industry. The first is the increasingly important responsibility of boards to oversee ESG criteria in response to the rapidly advancing EU regulatory agenda. The second is the rise of new governance practices in the wake of the COVID-19 crisis. Luxembourg-based funds and management companies have shown resilience in the face of the economic disruption brought on by the pandemic and were quick to follow the CSSF’s guidance on remote working, both at management and board level. As the fund industry recovers from the COVID-19 crisis, it will be interesting to see in the next edition of our survey if any of the reactions to the pandemic have been long-lasting.

I would like to sincerely thank all of the respondents for the time they took to participate in the survey, the members of the ILA Fund Committee who designed the survey and analysed the results and last but not least, my colleagues from the PwC Luxembourg’s Market Research Centre who were instrumental in putting this together.”

The survey is divided into key areas of interest; Board composition deals with matters such as the profile of board members (independence, expertise, age, gender, tenure), Board organisation, Roles & responsibilities of the board, Conflicts of interest and legal liabilities, Code of conduct examines board implementation of their adopted code and takes a closer look at the ALFI  code of conduct and Current challenges and Looking forward, which  explores how the shift towards ESG and the COVID-19 crisis have challenged current governance practices. It also considers the implications of the latest regulations as well as areas that will require extra attention from the board over the next two years.

Carine Feipel, Independent Director and Attorney at Law - Chair of the Luxembourg Directors Institute (ILA) said:

“ILA is proud to be presenting the 10th edition of the Fund Governance Survey together with PwC Luxembourg. The investment fund industry is a fundamental pillar of the Luxembourg economy. Having good governance in both investment funds and management companies is key for the internationally recognised brand of our funds and the outstanding reputation of Luxembourg's fund industry.

The trend to more, and better, governance in funds and their management companies is clearly evidenced by the over 120 market players participating in the survey, a constantly increasing number. This trend is certainly triggered by legal and regulatory requirements, but also by the value that good governance brings to funds and their investors. 2020 has clearly shown that robust governance, but still flexible enough to adapt to a rapidly changing environment, is essential to face the crisis that we could not foresee some months ago. The Fund Governance Survey therefore is issued at a particularly interesting moment and reflects the experiences gathered during this very unusual past year. At ILA, we have certainly done our best to help Directors to address the governance challenges that arose throughout the year.

I would like to warmly thank PwC for their continued support of this Fund Governance Survey, notably partner Mike Delano who chairs ILA's Investment Funds Committee. My sincere appreciation also goes to the members of our Funds Governance Committee as well as all the participants in the survey.”

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