Credit: Greenpeace Luxembourg
Greenpeace Luxembourg has announced that several banks in the Grand Duchy recently failed its climate-friendly advice check test.
How well do Luxembourg banks advise their customers on climate-friendly investments? To find out, Greenpeace carried out a "mystery shopping" exercise at six banks based in Luxembourg; a total of nineteen mystery shoppers conducted 27 counselling interviews in the selected financial institutions. The results showed considerable deficiencies in the products offered and in the expertise of the advisors. According to Greenpeace, the test clients were recommended investment products that were advertised as climate-friendly when in fact they were not compatible with the Paris Climate Agreement. Greenpeace has described this as "unacceptable given the urgency of the crisis we are facing". As such, Greenpeace has demanded that Luxembourg banks immediately start offering investment products that actually redirect capital into a climate-friendly economy.
"The analysis of the products recommended by the consultants revealed that none of the investment products offered meet the claim of investing in line with the Paris climate goals", explained Dr Martin Granzow, a financial expert at Nextra Consulting GmbH and the author of the report. "None of the products advertised as climate-friendly follows a reduction path for the greenhouse gas intensity of the contained companies that is compatible with the goal of a maximum global warming of 1.5 degrees".
Whilst an increasing number of bank clients want to invest their money sustainably, it is becoming clear, according to Greenpeace, that many "green" financial products do not deliver on their promises. For Greenpeace, the results of the mystery shopping are further proof that, while promoting its sustainable finance capacities, the Luxembourg financial centre is in fact guilty of greenwashing.
"The mystery shopping has made one thing clear: the banks must first do their own homework so that they can competently advise customers on sustainable investments", stated Martina Holbach, Campaigner for Sustainable Finance at Greenpeace Luxembourg. "The banks' advisors must be comprehensively trained in sustainable financial products. Above all, climate-friendly financial products that invest in accordance with the Paris Climate Agreement must become the standard at Luxembourg banks".
Greenpeace lamented that so far, the European legislation on sustainable finance has not been able to put a stop to greenwashing in the financial sector. A recent study by Greenpeace Luxembourg and Greenpeace Switzerland concluded that so-called sustainable investment funds have so far not succeeded in directing significantly more capital towards a sustainable economy than conventional funds. Yet, a climate-friendly economy is an important factor in the fight against the climate crisis.
"Greenpeace expects the Luxembourg government to set ambitious requirements for climate-friendly investments in Luxembourg", said Myrna Koster, Climate Justice Campaigner at Greenpeace Luxembourg. "Financial incentives for investment products that are not in line with the Paris climate goals or run counter to other sustainability goals must be stopped".
