The term sustainable finance is linked to the concept of sustainable development. The latter is part of a long-term perspective that aims to reconcile the economy, society and the environment. It is based on the idea that our planet is not an inheritance from our ancestors, but that we are borrowing it from our children.
"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs."
Brundtland Report, 1987 - Mrs Gro Harlem Bruntdland, Norwegian Prime Minister
Financial products can also mobilise private and business savings for sustainable projects.
It is about making financial decisions that take into account the impact of investments on the environment, social aspects and sound management of a company (so-called "governance criteria").
We are talking here about taking into account ESG criteria (for Environment, Social and Governance). These extra-financial criteria complement analyses based on financial indicators such as the companies' income statement and balance sheet.
measure dimensions such as environmental preservation, climate change mitigation, reduction of carbon footprint or greenhouse gases, biodiversity preservation, increasing energy efficiency, combating water and air pollution, combating deforestation, promoting the circular economy, etc.
measure the respect of human values such as equality, diversity and inclusion, education and training, respect for human rights, fair and equitable labour relations, prohibition of child labour, development of local communities.
help to ensure sound organisational rules in public and private organisations: diversity on boards of directors, guidelines for executive remuneration, hiring and integration practices, transparency of information, employee relations, traceability in the supply chain, and the fight against corruption and conflicts of interest.
Become an actor of a positive and profound change.
Invest according to your values, for a better, fairer, more ethical and more sustainable society.
Access a range of financial products that take into account both your investor profile and your ESG preferences.
Different products are available on investment platforms or can be proposed to you by your financial advisor:
Shares in investment funds that integrate ESG criteria to select ethical and sustainable companies and financial products in their portfolios.
Green, sustainable or social bonds, which are issued to finance projects or activities selected on the basis of environmental, social or good governance principles.
Direct shares: by managing your own portfolio (or through your investment advisor), you can directly select companies that are considering their environmental and/or social impacts.
If you do not wish to invest directly in such products due to lack of expertise, your advisor can also offer you a sustainable portfolio management mandate whereby s/he will manage your portfolio according to predetermined ESG criteria.
« Let's take up this challenge together, because we all have a role to play in ensuring the transition to sustainable finance. »
In recent years, sustainable finance regulation has made great strides. The aim is to provide more transparency about the companies' commitments and impact on environmental, social and governance issues, and also more transparency about the investment strategies of financial products.
Even if we are only at the beginning of this movement, the new rules already in place allow you to better know if the financial product in which you wish to invest corresponds to your values.
In order to help you find your way among financial products, some are labelled by LuxFlag, which certifies compliance with sustainability criteria.
Finally, if you wish to be accompanied in your investments, it is good to know that since August 2022 your bank or financial advisor is obliged to take into account your sustainability aspirations.
It should be emphasised that an investment in sustainable financial products meets the same risk-return criteria as a conventional financial product. The same caution and vigilance must be exercised with regard to the ESG characteristics and/or ambitions of these products.
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