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Alternative Market Briefing

Investor focus on ESG spurs change in Luxembourg

Tuesday, August 14, 2018

Investor interest in ESG is driving change in Luxembourg, according to delegates at the latest Opalesque Luxembourg Roundtable. Delegates say investors are already asking for enhanced disclosures that address ESG issues - a trend which is only likely to get more pronounced as millennials take over positions of power.

"By the year 2025, a whole different generation of people will be making investment and business decisions," says Mike Hornsby of EY. "They will be looking for more ESG information, data and processes. I see this trend in my own client base today where sustainability data on real estate assets, governance considerations, benchmarks, social considerations, and such things are all becoming more mainstream. ESG factors will become a part of the core business and not a niche product anymore."

When it comes to specific asset classes, ESG guidelines are causing a rethink about core portfolio holdings including real estate. "There is a significant correlation between ESG and positive financial outcomes," says EY's Hornsby. "If you think about investing in a large core fund of real estate, those assets have to be at the highest standards. You just will not be able to attract rental income from high-quality tenants over long periods without that. Funds that focus on implementing the right ESG standards and other credentials that will attract long-term clients are going to be the funds that do well."

New industries like Cleantech are also supported by the......................

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