Nicolas Mackel is a lobbyist for green and sustainable financial investments. The trained diplomat is CEO of the Luxembourg for Finance (LFF) financial center initiative and speaks for a leading financial center in the field of sustainable and green financial investments. For example, 251 sustainable bonds and more than 355 green bonds are listed on the Grand Duchy’s “Green Exchange” (Luxembourg Green Exchange, LGX).
According to Mackel, the already strong trend towards a more sustainable financial economy will accelerate even further. “The Green Finance segment will continue to develop exponentially,” he says in an interview with Personal-Financial.com.
Because despite growth, the green financial market is still a niche, according to Mackel, just two to three percent of bonds are green. “The share will rise sharply, not only for bonds but also for funds,” he is convinced. This is an important issue for Luxembourg, as the country has assets under management of around 4.5 trillion. After the USA, the second most important location for investment funds worldwide.
If the world wants to achieve the goals of the Paris Agreement on Climate Change, “then we have to do something,” says Mackel. “Our goal is that the financial activities are more sustainable overall.” The trend in this direction is strong. “All institutional investors, such as pension funds, are moving towards sustainable investments. As shareholders, you are demanding this more and more. ”By leaving the niche, he believes that“ gray ”, ie non-sustainable investments“ will disappear much faster than it took until green investments were created. ”
Mackel sees advantages for investors not only in the consideration of green aspects, but also in good corporate governance. “If investors start to think long-term, then that also leads to higher returns in the longer term.” The new taxonomy of the European Union (EU) for sustainable investments is also helpful. “Now you can get down to it and develop products,” he says.
Mackel is not only a lobbyist for green investments, but also for the financial sector as a whole, which contributes 31 percent to Luxembourg’s economic output. The industry employs 51,000 people, many of whom also commute from Germany. More than 500 asset managers are active in the Grand Duchy with around 630,000 inhabitants, plus 291 insurers and 128 international banks. Mackel has headed the agency since 2013, before that he was the Luxembourg consul general in Shanghai.
With the UK leaving the EU, the number of employees in the financial sector in Luxembourg has increased, particularly in investment companies. “In the two years after the United Kingdom left completely, around 3,000 new jobs will have been created,” reports Mackel. “This means that the annual growth has doubled.”
However, that doesn’t make the head of the financial center initiative happy. “That is not a six in the lottery, I would have preferred there had been no Brexit,” says Mackel. The reason: “We believe in European ideas and that mutual benefit grows through cooperation. That is why it is also important to find a good form of cooperation with the UK for the post-Brexit period. “
Brexit anger is in the air
An agreement is also important because trouble is in the air with the fund business, which is important for Luxembourg. It is about the so-called delegation. Many funds are domiciled in Luxembourg and are managed from there. However, the management that decides which stocks or bonds are included in the funds has often remained in London.
According to media reports, the French government in particular is pushing for this delegation to be restricted after the end of the Brexit transition period. This is not entirely selfless, because it is taken for granted that many fund managers would rather move to the metropolis of Paris than to Luxembourg or Frankfurt if they had to leave London. What Mackel doesn’t understand, who thinks Frankfurt is worth living in and promotes Luxembourg as a family-friendly location.
More division of labor in the future
Luxembourg is definitely a winner of Brexit, and not just because of the additional jobs. In the Global Financial Centers Index (GFCI), which is highly respected in the industry, the Grand Duchy in the tri-border region of Germany, France and Belgium is the most important financial center within the European Union (EU), although it only ranks 12th globally.
The top spots are occupied by New York City, London and Shanghai. In the 28th GFCI survey, the Chinese financial metropolis overtook the Japanese capital Tokyo, which is now only fourth. Frankfurt and Paris each lost three places and are now in 16th and 18th place respectively. The biggest climber in the EU is Madrid, which jumped 15 places and is now in 28th place. According to the industry, the Spanish capital has “hit the jackpot” with Credit Suisse, which apparently wants to control its EU business from here. Competitor UBS has set up its Europa-Bank in Frankfurt.
Mackel expects a kind of division of labor between the financial centers within the EU in the future, whereby he sees Luxembourg at the forefront of funds, private banks and payment transactions. Frankfurt and Paris have their strengths in investment banks and derivatives trading, while Amsterdam distinguishes itself in market infrastructure. Mackel does not want to speak of a fragmentation of the EU financial market. “Competition is good when it helps the private sector,” he says. To do this, the individual cities would have to “position themselves so that they can get better.”