Current ESG challenges in the Luxembourg financial center
Environmental, social and governance (ESG) criteria are currently specific topics that are also being discussed intensively in the Luxembourg financial center.
ESG is also seen as the measure of sustainability and the ethical impact of an investment.
They are synonymous with responsible investment, which goes hand in hand with financial returns.
National requirements as well as EU regulations pose challenges to the Luxembourg financial center, according to which the fund and investment industry in Luxembourg will also be required to disclose detailed information on ESG aspects. Among other things, the taxonomy results in new aspects to be considered, especially with regard to the risk management of funds and underlying portfolios.
ESG is driven, among other things, by factors in the market such as, on the one hand, ESG acceptance, especially compliance with fiduciary duties and regulations and ESG risk management for the portfolio, and, on the other hand, those factors that mitigate ESG acceptance, most notably here a lack of reliable ESG data, resource or cost issues related to internal integration, infrastructure, knowledge building, and a lack of available ESG staff for integration management.
To avoid risks of ESG violations (impact on performance or sales, reputational damage, or governance issues), many stakeholders in the Luxembourg financial center are asking themselves how to manage ESG in the future.
As the national financial supervisory authority (CSSF) has integrated ESG issues into its supervisory strategy and day-to-day supervision, it is important to note that sustainability in finance cannot be achieved through regulation alone, but also through training and expertise of financial sector stakeholders and consumers.
SiBeM Capital Partners would be happy to assist you with our services.
If you have any questions, please contact Mr. J. Höring, who is one of the first “Certified ESG Analyst” (“CESGA”) in Luxembourg and will be happy to help you.