By Siobhan Archer (@siobhanarcher15), Relationship Manager, PRI and Marie Luchet (@marielulu), Director of Continental Europe, PRI

Despite the global turmoil caused by COVID-19 in 2020, responsible investment has far from stalled this year – in fact, we’ve seen investors stepping up and dealing with ESG issues in real time.

In particular, we’ve seen responsible investment thrive in Belgium and Luxembourg, where the PRI signatory base has just passed the 100 mark. And while it’s true that the two markets have their own identities and characteristics, they are both important players in the responsible investment field – Belgium is the home of the EU Taxonomy and Luxembourg has issued the world’s first sustainability bond.

Given this, we look at some of the exciting responsible investment developments in the region.

Signatory growth

The PRI’s reach in Belgium and Luxembourg is relatively new, with strong growth of 38.5% over the last three years. The PRI currently has 101 signatories in the two regions, with 80% of signatories in Luxembourg and 20% in Belgium. Over the last year, despite the shocks of the COVID-19 pandemic, the PRI’s growth in the region remained high at 25 new signatories.

As the home of the UCITS funds and AIFMs, it is no surprise that as regulations on ESG become more prominent, asset and wealth managers in Luxembourg are waking up to the benefits of joining the PRI. Despite this, we do see growth lagging in the local pension fund sector in the country, a trend we hope will be reversed as pension funds ramp up their ESG efforts.

In Belgium, the increase can largely be explained by the insurance sector (AG Insurance, Ageas, Belfius IP and Ethias Assurances all signed up in the last three years), reiterating our belief that asset owners have a responsibility to drive responsible investment.

This is very much in line with the trend we’re seeing more broadly, with insurer signatory numbers globally up five-fold since 2010.

In fact, in 2006, five insurers were part of the PRI’s founding signatories. We now have 120 insurer signatories, representing 60% of PRI signatories’ AuM in the region.


New signatories in Belgium and Luxembourg

New signatories in Belgium and Luxembourg

In February, the European Stability Mechanism (ESM), the EU’s crisis resolutions body, signed up to the PRI to formally align its existing ESG practices and keep stakeholders informed of its responsible investment efforts through the PRI’s Reporting Framework.

Klaus Regling, Managing Director of the ESM, said: “We consider that adhering to the Principles for Responsible Investment is an important and positive step forward in our institution‐wide ESG efforts.”

Not long after signing up to the PRI, ESM established its Pandemic Crisis Support based on its Enhanced Conditions Credit Line (ECCL), available to all eurozone countries as part of the EU’s economic policy response to the COVID-19 crisis. The conditions explicitly detail the desire to “increase access to ESG-focused investors – some of these financial instruments might be ‘social bonds’, or similar, in line with the purpose of the use of funds”.

Further underpinning the trend towards sustainable investment, in October the European Investment Fund (EIF), announced it had joined the PRI as a signatory. The EU agency was set up in 1994 to support the region’s SMEs and is part of the European Investment Bank Group.

“As a PRI signatory, the EIF will further enhance its ESG investment practices and processes,” said Alain Godard, CEO, EIF.

“This cooperation is in line with EIF’s strong commitment to support the European Green Deal and the EU Climate Bank new level of ambition.”

As movement is often dominated by slow bureaucracy in European players, this was an exciting step for the region and private markets as a whole, and something we hope to see in the likes of the European Investment Bank and the European Commission’s (EC) treasury.

Policy and regulation

In July, EU leaders agreed on a €750 billion COVID-19 recovery package for member states. In October, the EC announced it will issue up to €100 billion in social bonds, adopting a new Social Bond Framework. Belgium and Luxembourg are keeping par with the numerous EC commitments on sustainability. For example:

In September, Luxembourg became the first European government to sell a “sustainability” bond, raising €1.5 billion. Listed on the LuxSE, and carrying a rating of AAA, the bond has a 12-year maturity. Its proceeds will finance and refinance social and environmental projects, including the electric public transportation service Luxtram and the country’s second largest hospital, Südspidol.

Moreover, this was also the first bond issued under Luxembourg’s new sustainable bond framework, compliant with the green and social activities eligibility criteria of the EU Taxonomy. The framework will allow the issuance of three types of bond: green, social and sustainability (a combination of both).

A by-product of the Luxembourg Sustainable Finance Roadmap by UNEP-FI and Luxembourg for Finance, we also applaud the creation, earlier this year, of the Luxembourg Sustainable Finance Initiative. It will seek to coordinate the exciting developments sector-wide and theme-specific in the country.

Finally, as quality standards rise, we have seen real innovation in ESG and responsible investment labelling in Belgium and Luxembourg through the Towards Sustainability label and the renowned LuxFLAG. LuxFLAG has seen excellent growth, with 112 funds achieving the notoriously difficult label. Towards Sustainability, which was only launched in 2019, already has 265 funds under its umbrella.

Looking to the future

The PRI is excited to continue deepening ties in the region with signatories and stakeholders alike. In fact, to do so, we have recently hired a Head of Begium and Luxembourg to ensure we build stronger ties with the responsible investment community there.

We hope to see further growth in 2021, but especially to connect with signatories in person – if the COVID-19 vaccine allows – to foster stronger relationships in this budding region.



This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories.

Please note that although you can expect to find some posts here that broadly accord with the PRI’s official views, the blog authors write in their individual capacity and there is no “house view”. Nor do the views and opinions expressed on this blog constitute financial or other professional advice.

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