LSFI Study Release: “Sustainable Finance in Luxembourg - A quantitative and qualitative overview”

fr en de

The Luxembourg Sustainable Finance Initiative (LSFI), in collaboration with PwC Luxembourg, has conducted a study which assesses the sustainable funds segment in Luxembourg to understand the current state of the sector, key trends, and the main sustainable investment strategies used. 

<< Back
13/12/2022 |
  • Nicoletta Centofanti LSFI Interim General Manager

    Nicoletta Centofanti, LSFI Interim General Manager

The study takes a deep dive into the sustainable finance industry, analysing the main ESG strategies implemented through sectoral analyses and asset classification breakdowns, among other dimensions. It also analyses the current impact assessment framework with the aim to complement existing studies and to identify gaps to determine actions for improvement.

Key findings of the study include:

  • Discrepancy on ESG fund qualification - The ESG dimensions and data assessed in various studies tend to vary as they heavily rely on individual data providers, who typically have sole oversight on how their ESG data is collected and classified.
  • ESG fund AuM represents more than half of Luxembourg UCITS assets - Despite the economic uncertainty and market turmoil during the first half of 2022, Luxembourg-domiciled ESG funds registered EUR 2.2tn in total assets at the end of June 2022[1]. This ESG fund AuM represents approximately 54.6% of the country’s overall UCITS fund assets, which surpassed EUR 4.0tn by the same period. PwC estimates the AuM of ESG UCITS funds domiciled in Luxembourg will surpass EUR 3.3tn by 2026.
  • Majority of Luxembourg UCITS fund AuM invested into Article 8 and 9 funds - Over 53% of UCITS AuM in Luxembourg is invested in funds adhering to either Article 8 or Article 9 disclosure requirements in compliance with the Sustainable Finance Disclosure Regulation (SFDR). Article 8 is the predominant category, with 47% of UCITS assets under this classification, while Article 9 constitutes 6%.
  • Asset allocation is well-diversified – Luxembourg-domiciled ESG UCITS funds are relatively well-diversified in terms of asset allocation. In terms of leading sectors, the Software and Services sector held the highest asset allocation sitting at 9.7%, followed by  Pharmaceuticals at 9.1%, and finally Capital Goods at 8.4%.
  • Applied ESG investment strategies - The study showed active management to be the predominant strategy for 92% of Luxembourg’s mutual fund. In the ESG segment, three core strategies emerge from the study:
    • ESG Exclusion Strategy – ESG Exclusion funds, i.e., funds that apply one or more exclusion criteria were the most predominant fund type in Luxembourg accounting for 54.8% of the ESG UCITs. Out of these funds, 27% apply up to 2 exclusions while 21% apply up to 3 exclusions – mainly from the weapons, tobacco and fossil energy sectors.
    • ESG Screening Strategy - ESG Screening funds, i.e., funds which only apply ESG factors into their overall screening process was the second most applied strategy, with 31% of fund assets.
    • ESG Involvement Strategy - ESG Involvement funds i.e., funds that cover Best-In-Class, Positive Tilt, Thematic, Microfinance, Sustainable Development Goals or Sustainable Bonds within their ESG strategy was the least applied, accounting for 18% of funds in the research sample and 14% of ESG fund assets.
  • Assessing impact - A lack of standardisation among ESG data providers, as well as a lack of generally accepted, standardised and utilised impact measures makes it particularly difficult to assess the impact of sustainable finance investments on the real economy at this stage.

“The transition towards sustainability is ongoing. Being in a transition period and considering the rapid development of sustainable finance, the ability to measure the progress made is of utmost importance. With this study, we wanted to complement the extensive and hard work of financial players over the last years in sustainable finance and further dive into it. We aim to provide a baseline for the financial industry, bring transparency and clarity, and identify strengths and gaps in order to help find improvement actions and appropriate solutions for the advancement of sustainable finance.” said Nicoletta Centofanti, LSFI Interim General Manager.

Access the full study here.

[1] A 14.2% drop in AuM from the end of 2021.

Back to top  | << Back

Communiqués liés

Apex logo 150x150 (002)

Apex Group boosts Saudi team with appointment of key executi...

Leading global financial service provider Apex Group has grown its team in the M...

Apex Group
Andre Reitenbach CEO at Gcore27

Gcore raises $60 million in series A Funding to drive AI inn...

Gcore, the global edge AI, cloud, network, and security solutions provider, toda...

Boeing 737-10 Luxair1

Luxair sélectionne le plus gros modèle des Boeing 737 MAX ...

Boeing et Luxair annoncent aujourd'hui que le transporteur régional européen c...

Global Wealth Report 2024

Global Wealth Report 2024 - La croissance revient à 4,2%, c...

Partout dans le monde, les gens s'enrichissent progressivement, et pas seule...

Boeing 737-8  Luxair copy

Luxair et lux-Airport font face à une panne technologique m...

Luxair et lux-Airport souhaitent informer le public sur la panne technologique m...

Apex logo 150x150 (002)

Apex Group Americas continues to expand its business develop...

Apex Group Ltd. (“Apex Group”) – global financial service provider - has a...

Apex Group

Il n'y a aucun résultat pour votre recherche

We use cookies to ensure the best experience on our website. By accepting you agree the use of cookies. OK Learn more