At its second 2019 Executive Board meeting on May 8th, the ABBL’s Corporate Finance, Capital Markets and Cash Management Cluster (hereafter called C3 Cluster) focused on the critical intermediation role banks hold in the economy. Were also discussed the relevant duties and opportunities in supporting people, businesses and the economic system as part of whole in a bank’s ESG (Environmental, Social, Governance) centric transition and future sustainable growth trajectory.
The cluster acts as “incubator” and main sponsor of the ABBL working group dedicated to sustainable finance activities. This group federates professional experience and expertise of the Luxembourg financial center in the field of sustainable finance.
With 2019 being pivotal in the positioning of the Luxembourg Financial Centre and a continued ESG momentum built, relevant activities and initiatives to date include:
- Endorsement of the UNEPFI principles of Responsible Banking by the ABBL board of directors in January 2019
- Establishment of a foundation certificate in sustainable finance in cooperation with House of Training (HoT) to be launched in 2019
- Contribution to the UNEP FI Luxembourg Sustainable Finance Roadmap
- ABBL sustainable finance market study: CEO Pulse Study 2019 [in cooperation with PWC] in May 2019
- International Impact Banking Conference [in cooperation with PwC] on 14 May 2019
At the 2nd PwC Green Finance Day, Frank Krings, head of the C3 cluster, underlined the importance of the “CEO Pulse Study 2019”
“There is genuine value in better understanding the specific economic, entrepreneurial and competitive circumstances in which industry participants operate in the ESG context, as well as their level of preparedness and strategic direction. Consequently, the multifaceted results of our first ABBL Sustainable Finance Market Study provide important insight in order to support and foster the strategic positioning of the Luxembourg financial center. Further, they allow continued refinement of the integrated impact banking concept and framework, for them to meet relevant stakeholder needs on a continuous basis.”
Product innovation
C³ members, among which notably covered bond banks, were the driving forces behind the new Luxembourg law on renewable infrastructure covered bond or “lettres de gage énergies renouvelables”. This product innovation and its legal framework further strengthen Luxembourg’s position as a center of competence in the field of green finance. As the relevant legal definitions are broad enough to encompass a wider range of ESG compliant assets, the instrument could become a catalyst for the investment in and refinancing of the ESG transition of corporate actors as well as the economy and society as a whole.
In parallel, ABBL and C³ members ensured consistent advocacy in relation to the intended harmonization by the EU Commission of covered bond activities across Europe.
What’s next?
Following the first 2019 C³ Executive board meeting in February focusing on the current and future Luxembourg securitization framework, and the thematic focus on sustainable finance at the recent May meeting, the meeting in the third quarter will focus on “fintech and payments”.
By Frank Krings, Head of the C³ Cluster & Fabio Mandorino, ABBL Adviser, Sustainable Finance
