Governance practices in Luxembourg’s fund industry are advancing, with an emphasis on diversity, accountability, and strategic oversight, as highlighted by a PwC survey.
In 2024, elections across 72 countries, involving over 3.7 billion voters, added fresh uncertainty to global markets. This highlights the growing importance of strong governance to handle policy shifts, regulations, and economic priorities. Luxembourg’s fund boards are stepping up, with survey results showing they are prepared to tackle risks and embrace new opportunities.
The 12th Luxembourg Fund Governance Survey was launched on January 23, 2025, at the annual Fund Day hosted by PwC Luxembourg and the Luxembourg Institute of Governance (ILA) at Crystal Park.
Enhanced board composition is one of the standout themes in this year’s survey. The proportion of independent directors has grown from 39% in 2022 to 41%, while 26% of boards now include at least one female member, reflecting progress in gender diversity, according to the research.
Board organisation has also improved, with boards meeting an average of 10 to 11 times annually, ensuring consistent oversight and decision-making. The widespread use of circular resolutions by 92% of boards demonstrates the adoption of efficient governance practices.
Boards are also laying stress on risk management and adapting to evolving regulatory landscapes, according to the report. Conflict-of-interest management has shown notable improvement, with 95% of Ucits boards maintaining conflict-of-interest registers, up from 86% in 2022. Similarly, 78% of alternative investment fund boards now maintain such registers, compared to 72% two years ago.
Alternative fund managers prioritise governance amid rising regulatory scrutiny
Anti-Money Laundering measures remain a top priority, with 85% of boards implementing stringent policies to mitigate risks. ESG considerations are now firmly integrated into board discussions, as 65% of boards have established ESG committees or appointed dedicated ESG roles.
Regulatory compliance is another critical area where boards have shown strong performance, according to the survey. 90% of respondents expressed confidence in their compliance frameworks, particularly in adapting to new regulations like the Digital Operational Resilience Act (Dora). Boards have also embraced self-assessment tools and invested in resources to ensure readiness for the rapidly changing regulatory environment, according to the research.
Andrea Montresori ILA fund committee chairman and PwC Luxembourg partner, said: “Amidst the 2024 election super-cycle and significant geopolitical shifts, Luxembourg’s fund industry shows strong governance practices. Despite these challenges, boards continually refine their practices and engage in their education. They align ESG strategies with business goals, fostering sustainability and complying with SFDR and taxonomy criteria. Observing robust governance practices among Luxembourg fund boards is encouraging, significantly contributing to the sector’s strength and resilience. This underscores the ongoing relevance of the Luxembourg Fund Governance Survey as a key resource for understanding governance practices, challenges, and opportunities. I extend my sincere appreciation to the survey respondents for their valuable insights, and I invite you to deep dive into its contents and analysis.”
