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Sustainable Finance

Introduction

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Sustainable finance is the integration of Environmental, Social and Governance (ESG) aspects into business and investment decisions in order to move beyond an analysis of purely financial aspects.

Sustainable finance represents an opportunity to shift financial flows to investments that help transition the world to a low-carbon, sustainable and fair economy. In particular in the fight against climate change, the role of finance is fundamental and sustainable finance is a key tool to mobilise capital into projects that do good.

In order to help build resilient and carbon-neutral economies, a number of initiatives have been put in place internationally and in Luxembourg.

The Ministry of Finance has a specific role and responsibility in supporting sustainable finance initiatives, negotiating, implementing dedicated EU legislation, setting policies, supporting the creation of national initiatives, and by taking part in international initiatives that stimulate the acceleration and mainstreaming of sustainable finance.

In the field of sustainable finance, the Ministry of Finance has a dedicated team and is a board member of four local organizations and six national investment and steering committees. Furthermore the Ministry represents Luxembourg at three international organisations, three European-level working groups, and supports four international initiatives.

Driving sustainable finance

The Ministry of Finance, together with several other entities, has set up roadmaps and strategies to support and drive sustainable finance in Luxembourg.

National initiatives

The Ministry of Finance is involved in various national initiatives promoting the implementation and the development of sustainable finance practices.

The Ministry of Finance is a board member of:

  • Luxembourg Sustainable Finance Initiative (LSFI)
    The Luxembourg Sustainable Finance Initiative is a not-for-profit public-private partnership that designs and implements the Luxembourg Sustainable Finance Strategy.
    The Ministry of Finance is a co-founder and member of the board.

  • International Climate Finance Accelerator (ICFA)
    An accelerator for first- or second-time climate fund managers which provides them with different services to accelerate the fund launch.
    The Ministry of Finance is a co-founder and member of the board.

  • LUXFLAG
    An independent and international not-for- profit responsible fund labeling agency created in 2006.
    The Ministry of Finance is a co-founder and member of the board.

  • Luxembourg Development Cooperation Agency (LUXDEV)
    An executing agency of Luxembourg's development cooperation, which mainly focuses on poverty eradication and sustainable development in its environmental, social, and economic aspects.
    The Ministry of Finance is a member of the board.

The Ministry of Finance is a member of:

  • Luxembourg-EIB Climate Finance Platform (LCFP)
    A platform that investments in junior tranches of layered funds, which invest in projects aimed at climate change mitigation and adaptation.
    The Ministry of Finance is a co-founder of the platform.

  • Forestry and Climate Change Fund (FCCF)
    A blended finance fund which invests in forestry companies, community forestry entities and owners of smaller forests, who focus on the management of secondary and degraded forests.
    The Ministry of Finance is a member of the investment committee.

  • Uni.lu Sustainable Finance Project
    A research project composed of a Master's track in Sustainable Finance and of research projects related to Sustainable Finance.
    The Ministry of Finance is one of the initiators of the project.

  • Luxembourg Sustainibility Bond Committee (SBC)
    Verifies that the proceeds of Luxembourg’s Green, Social and/or Sustainability Bond(s) meet the criteria of its Sustainability Bond Framework and oversees the implementation of the Bond Reports.
    The Ministry of Finance is a member of the Sustainability Bond Committee.

  • Commission interdépartementale du Développement Durable (CIDD)
    A national committee for implementing the national plan for sustainable development and integrating it into each relevant sector.
    Composed of different Ministries, including the Ministry of Finance.

  • Fonds Climat et Énergie (FCE)
    Managed by the Ministry of the Environment, Climate and Sustainable Development, the FCE is the national climate fund that supports climate activities locally and abroad. 
    The Ministry of Finance is a member of the FCE advisory board.

EU Sustainable Finance

The European Union is at the forefront of efforts to build a financial system supporting sustainable growth and has already laid down the foundations for the transition towards a sustainable and carbon-neutral economy by 2050. The Ministry of Finance is involved in the negotiation of EU laws, as well as the implementation and development of sustainable finance at the EU level, taking part in several working groups.

The Ministry of Finance is a member of:

  • Member State Expert Group on Sustainable Finance (MSEG SF)
    Coordinates sustainable finance initiatives at the European level and assists the European Commission in implementing EU legislation and policies related to sustainable finance.

  • Energy and Climate Change Working Group (ECCWG)
    Supports the Economic Policy Committee in providing economic analysis in the context of the implementation of the EU energy and climate package and its contribution to the goals of the Europe 2020 strategy.

  • Joint Procurement Steering Committee (JPSC)
    Oversees the implementation of the Joint Procurement Agreement. This Agreement guides the timing, the administration, and other aspects related to the auctioning of greenhouse gas emission allowances.

International Initiatives

At the international level, Luxembourg is a partner when it comes to sustainable finance initiatives due to its position as one of the main green financial centers in the EU.

The Ministry of Finance is a member of:

The Ministry of Finance supports:

  • Green Bond Technical Assistance Programme
    Supports market creation by stimulating the supply of green bonds in the emerging markets that meet the eligibility standards, which are usually required for investment by institutional investors in developed countries.

  • 2XCollaborative
    The 2XCollaborative is designed to serve investors making their first gender-focused investment as well as investors at the frontier of the field.

  • Global Green Growth Institute
    Treaty-based international, inter-governmental organization dedicated to supporting and promoting strong, inclusive and sustainable economic growth in developing countries and emerging economies.

  • Paris Agreement Capotal Transition Assessment (PACTA)
    2Dii is an independent, non-profit think tank that coordinates some of the world's largest research projects on sustainable finance.

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Organisation(s)

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