Luxembourg has reinforced its position as Europe’s leading hub for sustainable investment funds, according to a report by the Association of the Luxembourg Fund Industry (Alfi) and the Luxembourg Sustainable Finance Initiative (LSFI), Luxembourg’s coordinating entity on sustainable finance, and PwC Luxembourg.
The report pointed to growth across both public and private sustainable fund markets in the country.
Globally, sustainable public market funds reached €3.1tn in assets under management (AuM) by the end of 2025, representing 6% of total public market fund assets and reflecting a compound annual growth rate (CAGR) of 12.5% since 2020.
Sustainable public market funds in Europe stood at €2.6tn at end-2025, accounting for 18.8% of overall public market AuM. Meanwhile, nearly half of European public market fund assets (around €7.0tn) are now classified under Article 8 ( funds promoting environmental and social characteristics but do not have sustainability as their core objective) or Article 9 ( aiming for sustainable investments as a primary objective, targeting measurable environmental or social outcomes) of the EU’s Sustainable Finance Disclosure Regulation (SFDR).
Sustainable private market funds in Europe reached €1.1tn in AuM by the end of 2024, representing 27.4% of the total and posting a CAGR of 41.8% since 2020.
Luxembourg accounted for €815.4bn in sustainable public market fund assets at the end of 2025—31% of the European total—with growth of 9.1% annually since 2020. 71.5% of Luxembourg-domiciled public market fund assets fall under SFDR Article 8 or 9 classifications.
By the end of 2024, sustainable private market funds domiciled in Luxembourg reached €855.6bn, representing 77% of the European total and growing at a CAGR of 45.6% since 2020.
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Overall, Luxembourg’s combined sustainable public and private market fund assets stood at €1.63tn at the end of 2024.
The researchers attributed Luxembourg’s performance to its ability to adapt to regulatory developments and foster collaboration across its financial ecosystem.
Nicoletta Centofanti, CEO of LSFI, commented: “The need for sustainable finance not only persists but is intensifying, as it serves as a key driver of resilience and long-term value creation. In this evolving landscape, Luxembourg has firmly positioned itself as a leading international financial centre for sustainable finance. Going forward, measurement and high-quality data are key enablers of clarity, comparability, and confidence across jurisdictions and market segments. Through this research, we aim to support the financial industry by providing insights to advance the sustainable finance journey.”
Serge Weyland, CEO of Alfi, added: “Recent reviews of sustainability rules are a welcome opportunity to ensure that the framework delivers real impact rather than unnecessary complexity. The industry has an important role to play in supporting the transition to a more sustainable economy, but this requires clear, workable rules combined with leeway for innovation. With its strong expertise in cross-border fund structuring and its leading position in public and private markets, Luxembourg is uniquely positioned to help channel global capital toward sustainable and transition investments.”
Geoffroy Marcassoli, partner and sustainability assurance leader at PwC Luxembourg, said: “Although the Omnibus ‘simplification’ measures suggest a scaling back from previous regulatory ambitions, the asset management industry continues with its commitment. The emphasis is increasingly placed on robust data, measurable sustainability achievements, and enduring resilience. Luxembourg’s influential position within the European sustainable finance landscape continues to drive progress, guaranteeing that sustainability remains a fundamental strategic focus as frameworks such as the SFDR evolve.”
