Luxembourg Investment Vehicles
Evolving regulatory trends and challenges
The regulatory framework continues to evolve at the European Union (EU) level and the initiatives described below are already dominating
the fund industry in Luxembourg.
ESG
In March 2018, the European Commission published the action plan for financing a sustainable growth that targeted
all financial market players, especially asset managers. It aims to introduce measures to clarify asset managers' duties
in integrating ESG factors and risks into investment decisions, as well as to clarify and standardize transparency duties
and ESG reporting requirements. Practically speaking, this will require asset managers managing sustainable investment
products to factor ESG into their due diligence, portfolio management, monitoring and reporting. And, for all types of
investment products, asset managers will need to demonstrate how sustainability risks are factored into risk management
processes for example, by using climate scenarios and stress testing — to ultimately better manage their portfolios'
climate-related financial risks. These initiatives are likely to be voted by the end of 2019 and become applicable in 2020.
ESG webpage
Pan-European personal pension, or PEPP
The PEPP Regulation seeks to establish a legislative framework for personal pension products with a long-term retirement nature. Insofar
as possible, PEPPs should consider environmental, social and governance (ESG) factors given in the United Nations-supported Principles
for Responsible Investment. They should be simple, safe, reasonably-priced, transparent, consumer-friendly and portable Union-wide,
complementing member states' existing systems and therefore boosting pension savings.
The PEPP Regulation was published in the Official Journal of the EU (OJEU) on 25 July 2019. The Regulation will apply 12 months after
the OJEU publication of the delegated acts, which is estimated to happen by the end of 2020.
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Luxembourg Investment Vehicles
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