Ahead of Tuesday's presentation of the Luxembourg Sustainable Finance Strategy, Greenpeace has called on the government and financial actors to bring the investments made by the Luxembourg financial sector in line with the objectives of the Paris Agreement.
In a public statement, Greenpeace welcomed the concept of a Luxembourg Sustainable Finance Strategy. Nevertheless, the non-governmental environmental organisation warned that a strategy that does not aim to align the financial sector with the targets of the Paris Agreement was bound to ultimately fail.
While participating in the public consultation on the draft version of the Luxembourg Sustainable Finance Strategy at the end of 2020, Greenpeace Luxembourg had pointed out that the draft strategy focussed primarily on so-called sustainable financial products, although they represent only a small part of the investment activities carried out in Luxembourg. Greenpeace added that the draft strategy did not contain any clear targets, measures or timelines to bring the entire financial sector in line with climate-protection goals.
A study published by Greenpeace at the end of January 2021 revealed the damaging effects of the current investment practices of the Luxembourg fund industry on the climate.
Reacting to the Greenpeace study, the Association of the Luxembourg Fund Industry (ALFI) argued, among other things, that the problem could only be solved on a global scale and that "the transition to a climate-neutral and climate-resilient economy is a long journey" and that "we are only at the beginning of this process".
Greenpeace countered that time is of the essence. "We only have about ten years left to prevent catastrophic climate change," said Marttina Holbach, Climate and Finance Campaigner at Greenpeace Luxembourg. "Luxembourg's investment fund industry, the second largest in the world, must rise to this challenge. Luxembourg could thus make a global contribution to climate protection".
The non-profit also argued that, besides fuelling the climate emergency, providing funding to emission-intensive sectors poses a significant risk for Luxembourg's financial centre. Given the foreseeable drop in market demand for carbon-intensive assets, they are predicted to lose value in the near future. Financial actors who ignore this trend risk ending up with "stranded assets".
"We expect that the Luxembourg Sustainable Finance Strategy does not ignore the challenges that our financial centre is facing," added Martina Holbach. "Waiting for global solutions is not only wasting time in the fight against climate change. It also means Luxembourg would miss out on the opportunity to gain a competitive edge over other financial markets in terms of green finance solutions".
