Post by Guillaume Debauve

Sustainable finance in Europe and Luxembourg: navigating recalibration 🌍 Last Thursday I attended the kick-off event for the 2025 Luxembourg Sustainable Finance Initiative & ALFI - Association of the Luxembourg Fund Industry Sustainable Finance Study (supported by PwC Luxembourg) — and was interviewed on transition finance in the report (p. 14) 😎. My key takeaways: 📈 Scale is real. Luxembourg sustainable funds hit €1.6tn in AuM. Luxembourg is #1 European domicile for both sustainable public (31%) and private market funds (77%). Sustainable private markets grew at a 40.1% CAGR since 2020. ⚠️ But pressure is mounting. 2025 saw the first net outflows from European sustainable funds. Defence and oil & gas are back on the table. Asset managers are rethinking exclusions, definitions, product positioning. The credibility test is ahead. 🔍 Data is still the missing piece. AMs use 4 ESG providers on average. More data exists — but reliable data remains scarce. That gap is the structural weak point of the whole ecosystem. 📋 SFDR is BAU — and that's a good thing. Nearly 50% of European fund AuM discloses under Art. 8/9. Imperfect, but a real foundation. SFDR 2.0 is welcome. The real challenge: investors care about ESG risks, not SFDR labels. 🏭 Transition finance is the real opportunity — financing hard-to-abate sectors (steel, cement, gas) where green finance doesn't reach. Demand is highest in EMDEs. Luxembourg has both the opportunity and the responsibility to shape what comes next. 🇱🇺 Great to reconnect with Lorenzo Avico Nicoletta Centofanti Juliette Bouillon Désirée Doenges Isadora PARDO Marc Labat, CFA Laura Gehlkopf at the event 🤝 👇 Full report on LSFI & ALFI websites. https://lnkd.in/ep8RmAQB #SustainableFinance #ESG #Luxembourg #SFDR #TransitionFinance #LSFI #ALFI