In 2015, the United Nations set a list of 17 development goals, which were integrated into the Paris Accords the following year. Countries thus committed to channelling their efforts and reduce global warming to under two degrees.
Sustainable investments are one way that countries hope to achieve these ambitious goals, including the Grand Duchy. On the one hand, funds give direct support to renewable energies, sustainable transportation, and social projects. On the other hand, they support businesses that are still trying to make the transition. Although these so-called ESG funds (environmental, social, and governance factors) have no direct impact, they refuse to invest in areas such as nuclear energy, fossil fuels, tobacco, alcohol, or weaponry.
The EU commission has meanwhile initiated procedures to clearly define what constitutes a sustainable investment. A new proposal was filed on 21 April 2021, which the European Parliament and the member states now need to evaluate. Nuclear and gas-based energies are currently not included in the proposal, a decision which the EU commission will also reevaluate before the end of the year.
In the Grand Duchy, sustainable funds already have the possibility of receiving certification for their policies. The Luxembourg Finance Labelling Agency, in short LuxFLAG, takes care of the evaluation. At the moment, 347 different funds and bonds are certified. They manage a combined total of €150 billion.
Luxembourg thus has a pioneering role in the evolution of green finances and is considered one of the leaders in the field. In 2016, the world's first green stock market was established here in the Gand Duchy. Last year, the Luxembourg Sustainable Finance Initiative was launched to help promote the cause even further.
