October 8, 2019 / Analysis

Luxembourg claims victory in battle for sustainable fund flows

By Joe McGrath, ESG Clarity

The country is now home to 31% of all sustainable funds within the European Union.

Luxembourg claims victory in battle for sustainable fund flows

Luxembourg now accounts for nearly two fifths of all sustainable fund assets within the European Union, the country’s investment trade association has confirmed.

Figures released at the 28th annual Association of the Luxembourg Funds Industry Global Distribution Conference, show that the country is now home to 31% of all sustainable funds within the European trading bloc.

“Luxembourg has been promoting sustainable investing for many years,” explained Corinne Lamesch, chairperson of ALFI. “Now more than ever, investors want to entrust their savings to companies that make good decisions for the environment. This creates major opportunities for asset managers to help investors channel their savings into companies that allocate capital sustainably.”

Luxembourg as a financial centre has done well in recent years, building its total assets under management to some €4.5trn in assets.

At the recent conference, ALFI said that it believes climate change and concerns about the environment will lead investors to substantially increase the money they deploy into strategies which help address these themes, predicting that these strategies will attract an additional €1trn over the next 10 years.

“The fund industry needs to anticipate EU regulatory developments such as the EU taxonomy on sustainable finance and transform them into new products and new business opportunities, which could eventually become a success on the scale of the UCITS regime for cross-border retail funds,” explained Pierre Gramegna, Luxembourg’s minister of Finance.

“Sustainable finance is not good for you because it’s good for your conscience; it’s good business sense,” he told delegates.

ALFI is the trade group of the Luxembourg investment fund industry, representing some 1,300 funds domiciled there. It was founded in 1988.