Sustainable Investment Funds
As the world’s largest cross-border investment fund centre, Luxembourg has a strong track record in sustainable investments and provides the perfect environment for climate finance funds, notably thanks to the industry’s expertise in setting up layered and structured funds that that allow the leveraging of public and private investment.
Luxembourg is the European leader in responsible investment fund assets, accounting for 31% of funds and 39% of all assets under management. In terms of underlying environmental, social and governance (ESG) strategies, Luxembourg has the leading European market share of investment funds with environmental (38%), social (23%) and ethical investment strategies (56%).
Over the years, the Grand Duchy has developed a set of comprehensive investment fund tools. Together with an entire ecosystem of service providers dedicated to international fund distribution, this toolbox is one of the defining strengths of the financial centre, enabling promoters to create the precise structure they need, given the nature of the investment and the target investors.
All Luxembourg investment funds can be used for sustainable finance, whether they are regulated retail funds or investment funds aimed at professional and instructional investors. Similarly, all may benefit from an EEA marketing passport and can be structured as an umbrella fund with multiple compartments, each with different investment strategies and separate profit & loss accounts.
Testimony to Luxembourg’s role as a green finance hub, the International Finance Corporation decided to establish the Green Cornerstone Bond Fund, the world’s largest green-bond fund dedicated to emerging markets, in Luxembourg.