The EU group made several key recommendations to place sustainability at the heart of Europe’s financial system, including the development of an EU-wide taxonomy for sustainable finance. A sustainable model of development is regarded as vital to the long-term prosperity of the EU economy.
Europe is already a champion in the area of sustainable and responsible investment, with EU financial centres boasting special areas of expertise. Luxembourg, as the leading centre for global fund distribution, a key EU banking and insurance hub and the location of choice for international securities’ listings, has developed into an international platform for sustainable finance over the past decade (1). The country is today home to one-third of European responsible investment funds, 2 in 3 European impact funds and accounts for more than 60% of assets in microfinance funds worldwide, while half of the world’s listed green bonds are on the Luxembourg Green Exchange (LGX), the first dedicated platform in the world for sustainable, social and green securities.
Pierre Gramegna, Luxembourg Finance Minister, said: “The publication of the HLEG report marks an important milestone and outlines the road towards a more sustainable financial system that helps channel capital towards sustainable assets. Luxembourg is committed to work with the all the important stakeholders on the implementation of the various recommendations set out by HLEG. Thanks to its financial services industry, focused on cross-border services and funds, Luxembourg is already today raising finance and channeling investments to sustainable, social and green projects”
At national level, the Luxembourg government has embarked, together with United Nations Environment (UNEP), on the process of establishing a sustainable finance roadmap for the country, and the HLEG recommendations will be part of this road-mapping exercise.
Luxembourg has a long tradition of innovation in the area of sustainable finance. It launched a dedicated sustainable finance labelling agency (LuxFLAG) in 2006 and partnered with the European Investment Bank (EIB) to list the world’s first green bond on the Luxembourg Stock Exchange in 2007. LuxFLAG labels more than 50% of global microfinance assets in investment vehicles. The government and financial sector also established the Climate Finance Task Force and it has spawned several key initiatives over the past two years alone. These include a joint platform for climate finance investments between the Luxembourg government and the EIB; the launch of dedicated climate finance and green bond labels; an international climate finance accelerator to assist climate-savvy asset managers in setting up their funds and raise finance for innovative climate projects.
Nicolas Mackel, CEO of Luxembourg for Finance, said: “By leveraging its international financial centre, which connects issuers and investors from across the world with sustainable assets and helps them achieve their sustainable development ambitions, Luxembourg’s contribution to sustainable development and the global fight against climate change is much larger than its geographic size would suggest.”
The first Sustainable Finance Forum, Luxembourg will be held in Luxembourg on 30 May 2018, and bring together the European sustainable finance community, from practitioners to policymakers.
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