Financing a sustainable future: Luxembourg’s 2025 ambitions
The financial system plays a critical and fundamental role in the global economy, providing companies and entrepreneurs with the capital they need to finance their activities and achieve growth. No firm, be it the largest company in the world or a family-owned business, can function without financial services.
In light of this, the manner in which finance operates is of crucial importance. The growing realisation is that finance is critical to creating a sustainable future and a more equal society. Innovation can help put finance in reach of those previously unbanked, connecting them to the world. Digitalisation can help connect people to the global markets, allowing them to benefit from economic activity. Financial services act as connector, be it of people to the economy, or investments to projects and companies across the globe.
As the world looks to connect to combat climate change, poverty, and inequalities, among others, finance will be a linchpin in the system. The investments needed to combat climate change alone go well beyond the ability of governments – the global investor community will need to step up.
The Covid crisis, while clearly having a large impact economically and culturally, has also provided us with an ideal opportunity to build back better. Enormous fiscal firepower will be needed in order to catalyse this change and the recovery. It becomes clearer that sustainable finance is the future of finance. Luxembourg intends to contribute to the shaping of this new future by shaping the way in which we finance it.
In order to achieve this, we need to not only put sustainability at the core of what we do, but also building on the strengths we already have: Luxembourg’s openness to trade and financial and technological innovation. It is only through the foundation that has been built over the last half a century that Luxembourg is ideally positioned to take on this role and support the transition of trillions of euros of private capital into sustainable investments.
The Grand Duchy is already a world-class sustainable financial centre, being the leading sustainable bond listing location, the largest ESG fund domicile globally, home to the world’s first fully dedicated green exchange, and a pioneer in sustainable finance labels. Luxembourg has also created the Luxembourg Sustainable Finance Initiative and launched its sustainable finance strategy in order to ensure it continues pursuing sustainable finance objectives. In order to continue bringing sustainable finance into the mainstream however, it is important that the toolbox and reach of products and services is always expanded.
In light of this need, Luxembourg for Finance launched its Ambitions 2025 campaign to lay out how we intend to help shape this sustainable future, both as a response to Covid-19 and beyond that. Structured around six core themes that are already central to financial services in the Grand Duchy, the strategic plan lays out the vision for the development of the financial centre up to 2025.