“Climate change is not a scenario for the distant future; it’s already affecting all asset classes,” said Lisa Backes, deputy CEO of Hauck & Aufhäuser Fund Services, during the LuxFlag Sustainable Investment Week in Luxembourg. For banks, sustainability has become a strategic and regulatory issue at the core of risk management and client relations.
Due to the accumulation of natural disasters and European regulatory pressure, financial players can no longer rely on mere words. Climate, environmental, and governance risks have become measurable and are now an integral part of portfolio management.
According to Backes, sustainability is a natural extension of risk management: it helps anticipate shocks, identify vulnerabilities, and strengthen portfolio resilience.
Take the growing difficulty of insuring certain regions—a clear signal of the material impact of climate risks on markets. Backes believes the key lies in turning ESG into a predictive analysis tool: not as a moral add-on, but as an indicator of trust and performance. “Asset managers must detect weak signals before they escalate into crises,” she said. Sustainability thus becomes as essential a steering instrument as financial ratios.
At Société Générale Private Banking, Petra Besson Fencikova also observes a fundamental change in demand. “Ten years ago, ESG was seen as something nice to have. Today, it’s a structural requirement,” she emphasized. She also notes a shift among clients, who are better informed and now demand clear explanations of the methodologies, criteria, and limitations behind sustainable approaches. Transparency has become a commercial necessity, Besson said.
This growing maturity comes with internal professionalization. Management teams must master regulatory frameworks such as the taxonomy and SFDR and have robust data to support their recommendations. The availability and quality of such data remain a daily challenge. A good ESG manager, according to Besson Fencikova, is above all an analyst who combines skepticism and discipline: having enough data to act, while remaining aware of its limitations.
Besson also points to the “greenwashing” effect: the crisis of trust that emerged in the United States has led to stricter consistency requirements in Europe. Both private and institutional investors now scrutinize the credibility of sustainable strategies, forcing banks to be more transparent. “This tightening of standards is not an obstacle,” Besson said, “but a necessary step toward a stronger sustainable finance sector.”
At ING Luxembourg, Jan De Jaeck stresses the importance of balancing ambition with realism. “We want to contribute to financing the transition without losing sight of economic reality,” he explained. The bank, active worldwide in sustainable finance, has a specialized team in Brussels, while in Luxembourg the focus is on supporting corporate and institutional clients.
According to De Jaeck, the main challenge lies in translating ESG intentions into concrete actions, while managing market pressures such as higher interest rates and tighter credit. Wealthy individuals are also asking increasingly detailed questions about sustainable funds. They want to understand exclusion criteria, evaluation methods, and measurable impact. Advisors must therefore adapt their explanations and clarify why certain products no longer fall under official ESG definitions after recent regulatory changes.
De Jaeck believes that the growing complexity of the European framework (SFDR, taxonomy, CSRD) is not merely a burden: it pushes banks to raise their standards and integrate sustainability into daily processes instead of treating it as a separate category. But that ambition comes at a cost: “Teams must constantly upskill and adapt, because regulation is evolving faster than the tools available to implement it.”
In this regard, all three speakers agree: sustainability has entered a new phase of maturity. After declarations and promises, the focus is now on data and credibility. The most forward-looking banks are those that integrate ESG into their risk management systems, aligned with their financial objectives.
Regulation is not a brake but a natural filter that distinguishes genuine commitment from opportunistic communication. For Luxembourg banks, the challenge now lies in combining rigor and clarity: reassuring clients about the soundness of their products while explaining the evolving regulatory framework.
As Backes summarized it, sustainable finance is no longer a niche—it’s a condition for existence. Besson Fencikova sees it as “a sign of seriousness and professionalism,” while De Jaeck emphasizes its economic importance: “Financing the real transition, not just declaring it.”