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Luxembourg joining global gathering of the responsible investments industry

Luxembourg at night

The Global Ethical Finance Forum (GEFF) to host leaders from one of the world’s most active hubs for ethical finance

The presence of a strong delegation from Luxembourg at a historic ethical finance forum in September has resonated with a growing theme of convergence between the responsible investments and Islamic finance industries. The upcoming Global Ethical Finance Forum (GEFF) will host high profile delegations from all corners of the world, and it is perfectly fitting that Europe’s largest centre for investment funds (including many Shariah compliant funds) is participating in full force.

Indeed, the representatives of the Grand Duchy’s financial sector see this ground-breaking gathering as part of a global effort to increase collaboration between Islamic finance and the wider ethical finance universe, with the view of bringing this growing sector into the mainstream.

Luxembourg: a leader in responsible finance<br/> As a leading international financial centre, Luxembourg has demonstrated a strong commitment to deploying the financial sector to create social impact. It is home to the Inclusive Finance Network Luxembourg which in conjunction with Luxembourg for Finance and the Association of the Luxembourg Fund Industry (ALFI) has been instrumental to forging a growth platform for Europe’s responsible investing industry - including 65% of the continent’s microfinance funds.

Luxembourg’s leadership story began in 2004 when ALFI set up a Standing Committee on Socially Responsible Investing to create a definition of strategies and ESG labels at the European level. In 2013, the Luxembourg stock exchange launched a Responsible Investment Fund Index. The country’s legal framework offering a range of investment vehicles, global network of tax treaties and human capital helped place Luxembourg at the center of European microfinance capital formation.

The Luxembourg Fund Labelling Agency (LuxFLAG), a pioneering fund labeling agency for responsible investment funds to promote transparency for investors, was created to strengthen Luxembourg’s responsible finance infrastructure. The LuxFLAG ESG label is the first of its kind that instills confidence to investors through its independent and transparent labelling process. Created as a public-private partnership between the European Investment Bank and 6 other partners, LuxFLAG has a mandate to award labels to investment funds that meet specific measurable criteria, thus providing transparency for investors and facilitating the expansion of responsible investment.

Sachin Vankalas, Head of Operations and Sustainability for Luxembourg Fund Labelling Agency (LuxFLAG), commented: “In Europe, over the past five years, responsible investment (RI) strategies are continuing to grow, in aggregate, at a faster rate than any other investment strategies. As a result of its growing awareness and acceptance among mainstream investors, terms such as best in class, integration, engagement and exclusion have become known and are being applied in mainstream investing. At the 1st Global Ethical Finance Forum in September we look forward to meet different stakeholders involved in the RI market and discuss about current trends and opportunities for the RI industry. ”

A leading European hub for Islamic finance
In addition to highlighting the growth of responsible investing, the Global Ethical Finance Forum aims to connect it with the faith-based segment of ethical finance - in particular, Islamic finance. Luxembourg is home to Europe’s largest and the world’s fifth largest Islamic funds sector, amounting to $2.3 billion. It is also recognized as an attractive Western jurisdiction for listing sukuk and the government has demonstrated its own confidence in sukuk by issuing a landmark sovereign sukuk for €200 million issuance last year, the first Euro-denominated sovereign sukuk since 2004.

Deloitte Luxembourg’s Marco Lichtfous, a Partner in the Advisory & Consulting practice, is one of the distinguished leaders in the field who will speak at GEFF. In reference to the country’s formative role at the conference, he said, “Luxembourg is undoubtedly a leader in Islamic finance services in Europe and one of the preferred choice for Sukuk issuances worldwide. It has aided to a great extent in propelling Sukuk to the Mainstream and the sovereign Sukuk issued last year is a strong testament to its commitment.”

Marco highlighted the forum’s gathering of leading players, stating: “At GEFF, I look forward to the discussions on the role of key jurisdictions in the development of Sukuk market and sharing my experiences with the participants.”

GEFF 2015 will take place on the 1st and 2nd of September at the historic Balmoral Hotel in downtown Edinburgh, one of Europe’s cultural and literary capitals.

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