ESG data and reporting have become critical to meet regulatory requirements but confusion reigns on what needs to be done and the costs as well as the risks associated with those actions.
“People that really move the market such as the HNWI want to make money first as every business so how can we involve them in contributing to sustainable finance, how to make them care about it?” questioned Nasir Zubairi (CEO, LHoFT). To understand the core challenges and where does ESG stand today in the country, the LHoFT is currently conducting a broad survey together with Deloitte and it will be unveiled at the beginning of December 2022.
Some key findings
> Sustainability is a priority and financial institutions have an important role to play to achieve mutual goals
> Luxembourg enjoys a rich FinTech and sustainable environment and relies on a deep ecosystem engaged towards advancing industry knowledge and best practices in the financial sector.
> There is a growth of Luxembourg’s FinTech sector’s ESG offerings. Indeed FinTech are attracted by multicultural and dynamic market as well as broad and easily accessible industry. Financial institutions recognize the benefit of working with FinTechs to tackle complexities and sustainable finance.
> Availability and management of ESG data is a major business. Data is the main area of focus of ESF FinTechs and Financial Institutions. FinTechs can support with data collection, integration and consolidation, as well as quality assurance and report production.
> Education and expertise are required in order to achieve goals.
> Uncertain regulatory landscape
> Collaborative, multi-stakeholder and cross sectoral approach. Collaboration is a must for ensuring fast, agile, and effective change and impact
> Regulator and government initiatives. Initiatives can be developed to drive rapid growth in the sector
Sustainable finance is a top priority for Luxembourg. “A lot of associations have been created to spare this movement all along” explained Zubairi at the Digital Finance Summit in Brussels last Tuesday and continued “We, as LHoFT, for the past 5 years, have been running a bootcamp that happened in October and entitled Catapult: Inclusion Africa. It is a source of pride.” The programme is aiming to build bridges with Luxembourg’s Microfinance industry while highlighting African companies’ initiatives in alignment with the sustainability goals of Luxembourg’s finance centre.
To achieve such goals “data remains the biggest issue. The lack of qualitative information represents a wonderful opportunity for FinTech firms to help with reporting requirements. RegTech blossoms in Luxembourg and FinTechs, generally speaking, benefit from interesting skills for financial services when it comes to complying with ESG criteria.”
From the report, practical actions are taken and this starts with a new mindset set up and what organisations instill among the people.
More information to follow beginning of December with the results of the study conducted by The LHoFT and Deloitte.