Sustainable Investing is gradually gaining popularity with investors from around the world, including in Luxembourg, where the government, in close coordination with the financial sector, is pursuing its vision of becoming the world’s leading sustainable financial center. “This is a big and promising step forward,” says Tonika Hirdman, General Director of the Luxembourg Foundation.
“For foundations that support a broad range of philanthropic goals, it is essential to match their investments with the purpose of the foundation and to ensure consistency between the values of the founders and the investments of the foundation. Although most banks in Luxembourg today offer a wide range of sustainable products and services, unfortunately few of them have integrated environmental, social and governance (ESG) factors into their investment portfolios.” This is the result of a recent survey conducted by the Luxembourg Foundation among the many banks with which it cooperates on behalf of more than 80 foundations managed under its umbrella.
Impact investing seeks financial return while investing in innovative solutions to social and environmental problems. The idea is that doing good is just as important as turning a profit.
This and other news in the financial sector you can easily find in born2invest app, that collects the latest business news among all sectors investors operate in.
Sustainable investment policy
The Luxembourg Foundation recommends that each new founder pursue a sustainable investment policy that takes into account not only financial aspects but also ESG factors. Their reaction is usually very positive. When deciding on such an ESG approach, it is important that it is comprehensive and easy to apply, with clear criteria and a monitoring approach.
Typically, foundations choose between negative screening, which excludes investments in companies or sectors that conflict with the purpose of the foundation, and a positive approach, which selects companies that actively monitor their ESG risks. A third approach is active engagement, which involves influencing the companies in which the investment is made in such a way that harmful social or environmental practices are tackled by themselves. Many investors choose a combination of these three strategies.
It is true that most foundations invest in funds rather than directly through equity in companies. In this context, the Luxembourg label organization Luxflag offers investors guidelines to ensure that funds really do invest as they claim. Unfortunately, there are currently not enough labelled funds available to achieve a well diversified portfolio.
Hopefully, future EU regulation in this area will lead more funds in this direction. For foundations that want to go one step further, a strategy could be developed to further support this not only through grants, but also through so-called impact investments such as microfinance or social enterprises. In this way, a foundation can achieve a double effect.
Impact Investment aims to solve social and environmental problems such as poverty and climate change, while generating modest financial returns that can be reinvested to ensure continuity and long-term impact. If more financial institutions in Luxembourg became fully involved in this area, for example by applying ESG to their full range of products and services, this would be a real opportunity to change the world.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in Journal, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Agricultural stock news every investor needs to know
The market has been short in Corn as farmers have been holding. That means that there is very little Corn...
3 tech investment sectors to capitalize on the 5G revolution
It's been clear that the size of the expected revolution that 5G will create is certain to be huge. For...
4 important biotech conferences to attend this year
2020 is full of events, and here are some of the most interesting biotech conferences every professional should consider: Bio€quity...
Crowdfunding rules are changing in Europe
Crowdfunding projects with up to $5.5 million (€5 million) are getting new regulations from the European Crowdfunding Service Providers (ECSP)....
Collapsing construction sector in Catalonia and Barcelona
Assumpció Puig from the Association of Architects of Catalonia explained that the construction sector is in the phase of deceleration....
- Crypto7 days ago
21 blockchain startups to compete at the European Blockchain Convention
- Business7 days ago
EssilorLuxottica is building an ambitious vision for 2020
- Africa7 days ago
Côte d’Ivoire and Ghana want to create a cocoa OPEC to support farmers
- Biotech7 days ago
German biotech companies continue to raise capital despite uncertainty