Are wealthy people the only ones who have access to sustainable investments?

Investments are notions often attributed to people with substantial financial assets. It is quite clear that a large proportion of Luxembourg households have no financial reserves and are forced to live from day to day.

Nohalteg Finanzen 14.12.2022

However, as the annual study by the Association des Banques et Banquiers Luxembourg (ABBL) based on figures from the Commission de Surveillance du Secteur Financier (CSSF) on the Luxembourg retail banking sector shows, many Luxembourg residents still hold their financial reserves in cash or in savings plans. These assets could be used to finance companies developing sustainable projects.

But let's not forget all those who have already invested all or part of their financial assets in a product that is, by and large, well known and democratised, namely investment funds. And, it is largely through this type of product that sustainable finance will be implemented. The step to be taken is therefore not so important for some in terms of changes in financial behaviour.

Besides, "all or part" is an interesting notion. Indeed, there is no need to invest all your assets in sustainable finance if you do not want to. You can decide to invest only a part of it, a few thousand euros, to test it and thus have a positive impact on the environment or on society.

Wouldn't sustainable financial products be like organic products: more expensive and often not as tasty?

This is another misconception that needs to be addressed. Sustainable investments follow the same rules as conventional investments. The range of sustainable products is more or less risky, offers more or less prospects of profitability, offers more or less diversification, meets different investment horizons, uses more or less complex structures etc.

The most common types of sustainable investment are

  1. Buying shares in investment funds that integrate ESG criteria to select ethical and sustainable companies and financial products in their portfolios.
  2. Buying green, sustainable or social bonds, which are issued to finance selected projects or activities based on environmental, social or good governance concerns.
  3. Direct purchase of shares: by managing your own share portfolio (or through your investment advisor), you can directly select companies that are concerned about their environmental and/or social impacts. Corporate social responsibility (CSR) commitments can be understood by investors through corporate social performance statements.
  4. Sustainable savings plans: these are accounts where the funds deposited are invested in sustainable companies.

If sustainable investments are not just for the rich, then why haven't I been offered any?

Many savers prefer to deposit in savings accounts. It is difficult for them to take the plunge without understanding the mechanisms, risks and issues involved in investing in a fund for example. It is the role of the financial adviser to guide you and suggest investments that are in line with your risk profile and investment horizon.

Since 2 August this year, a new regulation requires banks to inform and support their customers in their decisions in favour of sustainable investments. This means that when you go to your financial adviser for investment advice, he or she will have to take into account your environmental, social and societal preferences and incorporate these into their recommendations.

Figures of the month :

EUR 180 billion
is the figure for additional annual funding to be made available between now and 2030, as announced by the European Union, in order to achieve the energy and climate objectives to which it has committed itself.

is the percentage of assets that Luxembourg retail bank customers hold in current and savings accounts, according to the "Retail Banking 2022 ABBL/CSSF" study.

is the percentage of Luxembourgers who have not yet invested in sustainable finance products, but who could imagine doing so according to the ABBL - CSSF - LSFI study on the relationship of Luxembourg residents to sustainable finance.

For more information:
- The sustainable finance guide published by the ABBL and the Chamber of Commerce
- The pages dedicated to sustainable development on the CSSF Letzfin website