The report, “Sustainable Finance in Luxembourg 2024: A Maturing Ecosystem“, marks the third edition in its series and aims to provide a picture of the state of sustainable finance in Luxembourg. It examines the core ESG strategies adopted by mutual funds based in Luxembourg, focusing on their evolution in terms of the number of funds and their AuM and delving into the ESG strategies employed. It also looks, for the first time, at ESG strategies within private markets and stewardship mandates of Luxembourg players. The study also offers other key updates, including PAI reporting, the use of the voluntary European ESG Template (EET), climate-related affiliations embraced by Luxembourg market participants as well as an overview of the key sustainable finance players in Luxembourg.

The study reveals that Luxembourg-domiciled ESG UCITS experienced a substantial 12.3% increase in AuM from H2 2022 to June 2024, reaching €3,247.7 billion. This rebound reflects growing investor confidence and strategic advancements within the sustainable finance ecosystem.

Meanwhile, private market accelerates with ESG private market funds demonstrating exceptional growth, achieving a CAGR of 95.2% from 2019 to 2023. Private equity remains the leading asset class, with €267.5 billion in AuM, followed by infrastructure (€188.9 billion), real estate (€107.7 billion), and private debt (€58.7 billion).

“Sustainable finance is essential for Luxembourg’s financial centre to address climate and nature-related risks and take an active role towards the current social and environmental challenges. Sustainable Finance is also an opportunity for financial institutions related to funding, talent, and reputation, among many others. In short, embedding sustainable finance is key to the future resilience and competitiveness of our financial centre. However, it is a complex journey requiring new skills, metrics, and processes. This study aims to support the financial sectors in this regard, assessing Luxembourg’s progress, trends, and challenges in sustainable finance. Gaining this understanding is essential for financial market participants to fulfil their crucial role in driving the much-needed sustainable transition.”

“The evolution of frameworks like ELTIF 2.0 and SFDR will open new doors for retail and institutional investors to align their portfolios with meaningful environmental and social goals.  To maximise our impact, we must prioritise data quality, standardised reporting, and effective impact measurement. Embracing innovation and technology, such as AI-driven data analytics and blockchain-based traceability, can unlock new opportunities and drive sustainable growth. By collaborating closely with international partners, Luxembourg can continue to set the standard for how financial markets drive the transition to a more equitable and sustainable world.”

About LSFI

The Luxembourg Sustainable Finance Initiative (LSFI) (www.lsfi.lu) is Luxembourg’s coordinating entity on sustainable finance. It is a Public-Private-Partnership that supports the transition of the financial sector towards sustainable finance.

The LSFI was founded in January 2020 by the Luxembourg Government (Ministry of Finance, Ministry of the Environment, Climate and Biodiversity), Luxembourg for Finance (the agency for the development of the financial centre) and the High Council for Sustainable Development (Conseil Supérieur pour un Développement Durable), an independent advisory body to the Luxembourg Government about sustainable development matters that represents the civil society.