Luxembourg, 27 September 2021 - Today, a group of civil society organisations (CSOs)  presented their main points of criticism of the Luxembourg Sustainable Finance Strategy (LSFS).
The key conclusions are that the LSFS is lacking clear objectives, concrete measures and a timeline for the Luxembourg finance sector to ensure the protection of human rights and the environment. Generally speaking, there was a complete disregard by the LSFI for the input given by the organisations during the public consultation phase. For example, the LSFS provides no framework to align Luxembourg’s financial sector with the Paris Agreement or with the challenges concerning the UN Guiding Principles on Business and Human rights. The group of CSOs calls for the rectification of these shortcomings in an upcoming strategy review, as well as a clear commitment by the government to create the necessary regulatory framework to align the financial sector with sustainability goals.
Launched on 9 February 2021 by the Luxembourg Sustainable Finance Initiative (LSFI) , the ‘Luxembourg Sustainable Finance Strategy’ aims at raising awareness of, promoting and helping develop sustainable finance initiatives in Luxembourg. As part of a public consultation, more than 30 organisations  provided feedback on the strategy’s initial draft at the end of 2020. However, at the publication of the final strategy document, the CSOs were disappointed to find that next to none of their recommendations were taken into consideration by the LSFI and that the final strategy has serious shortcomings. The group of CSOs thus decided to reiterate their concerns and demands .
According to the CSOs, the LSFS contains significant gaps which, if left unaddressed, will prevent the strategy from delivering any meaningful improvements in sustainable finance. For instance, in a classic case of quantity over quality, the LSFS focuses on promoting sustainable finance initiatives without examining whether or not the initiatives in question lead to actual sustainable development in the real economy. Moreover, the LSFS fails to address the fact that Luxembourg’s financial industry is seriously lagging behind when it comes to aligning its finance flows with the objectives of the Paris agreement. Another considerable criticism levelled at the LSFS involves the lack of concrete measures to protect human rights.
In light of these shortcomings, the group of CSOs demands that the status quo of the Luxembourg financial sector regarding its environmental and societal impact is analysed to allow for the monitoring and measuring of progress towards short-, middle-, and long-term objectives. The LSFS must be to bring all financial flows in line with the objectives of the Paris Agreement and bring sustainable finance into the mainstream, while avoiding greenwashing and rebranding.
Voluntary measures alone will not deliver the necessary change in the financial industry towards more sustainability. The Luxembourg government needs to take a strong stance and commit to aligning the financial centre with sustainability goals by creating the right regulatory framework for a broad transformation of Luxembourg’s financial industry. The national supervisory authorities (CSSF, CAA and BCL) should establish clear requirements for financial institutions to assess and manage the risks associated with neglecting sustainability concerns in their business model.
The protection of human rights has to become a prominent feature of the LSFS. By adopting a national law on human rights and environmental due diligence, including for the financial sector, Luxembourg, as a candidate for the UN Human Rights Council and as a signatory to many international conventions and treaties (e.g. CBD, UNFCCC, ILO), could play a much more proactive role at the national and EU level in shaping a more ambitious regulation.
Last but not least, civil society must be closely involved in the solution-finding process as it plays a crucial role in the fight against climate change, biodiversity loss and human rights abuses.
As a global financial player, Luxembourg needs to assume its responsibility to guide, monitor and regulate financial players and their operations, especially when it comes to safeguarding the environment and protecting human rights. The LSFS has to reflect this responsibility and address the currently missing or inadequate aspects of its approach if it is to bring sustainable finance into the mainstream and create a real impact. Only then will it live up to its potential and become a real game-changer for millions of lives and livelihoods.
Notes to editors :
 Etika, Greenpeace Luxembourg, ASTM, Commission Justice & Paix, SOS Faim as well as the NGO federation Cercle de Coopération des ONGD.
 The LSFI was founded in January 2020 by the Luxembourg Government, Luxembourg for Finance (the agency for the development of the financial centre) and the High Council for Sustainable Development (an independent advisory body to the Luxembourg Government about sustainable development matters that represents the civil society.)
 Luxembourg Sustainable Finance Initiative, ‘A Sustainable Finance Strategy for Luxembourg and its financial centre’, Press release, 9 February 2021
 Download the brief “Why the Luxembourg Sustainable Finance Strategy will not deliver : Components for bringing sustainable finance into the mainstream” here. The briefing note is not a point-for-point critique of the LSFS, but meant to highlight significant gaps in the strategy which, if left unaddressed, will prevent the LSFS from delivering any meaningful improvements in sustainable finance.
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