A Global Hub for Inclusive and Impact Finance
For over 30 years, Luxembourg has been a global leader in inclusive and impact finance. Leveraging its robust financial ecosystem, the country has earned global recognition in the field of impact investing. From microfinance to climate and gender-smart finance, Luxembourg’s innovative, cross-sector collaboration continues to shape transformative financial solutions.
Luxembourg’s comprehensive regulatory environment has also enabled the growth of blended finance structures. This unique combination of public-private cooperation and a forward-looking legal framework for sustainable finance reinforces its commitment to tackle some of the world’s most pressing challenges.
Evolution of Impact Funds
Since 2005, the establishment of Luxembourg-domiciled impact funds has accelerated, with significant momentum over the past decade. Initially led by microfinance vehicles, the market has since diversified.
Post-2017, there has been a marked rise in climate and energy-focused funds. Concurrently, the ecosystem has expanded to include a steady introduction of food and agriculture funds, as well as multi-sector vehicles.
Leadership in Microfinance
Luxembourg is home to one in three microfinance investment vehicles (MIVs) globally and manages the majority share of global microfinance assets. This positions the country ahead of key financial jurisdictions, including the United States.
This leadership is reflected in the following figures:
in assets managed by UCITS funds dedicated to microfinance
Source: LSFI Report 2024
in assets managed by private asset impact funds dedicated to microfinance
Source: Tameo, March 2025 – Private Asset Impact Fund Report
ADA - Driving Inclusive Finance
Founded in Luxembourg over three decades ago, ADA (Appui au Développement Autonome) empowers vulnerable populations through tailored financial services. While its early focus was supporting microfinance institutions (MFIs), ADA’s scope has broadened to include inclusive finance solutions fit for today’s rapidly evolving financial landscape.
In 2024, 330 organisations (out of which 128 financial institutions) received support from ADA to strengthen their capacities and offer financial services (including agricultural and green loans, youth loans, savings and insurance) and non-financial services (such as trainings on entrepreneurship and financial education) to vulnerable populations. This year, 293 232 people benefited from at least one of these services, out of which 147 446 from a financial service, credit and insurance in majority.
Microfinance to Gender-Smart Finance
Luxembourg has been a pioneer in the sector, exemplified by the creation of the Luxembourg Microfinance and Development Fund (LMDF) and its role as host to the Microfinance Enhancement Facility (MEF)—which in early 2024 evolved into the Global Gender-Smart Fund (GGSF). This reoriented fund now focuses on advancing gender-smart and responsible financial services.
Ecosystem Collaboration
Luxembourg fosters inclusive finance through robust collaboration between public, private, and civil society actors. Key initiatives include:
- Inclusive Finance Network Luxembourg Asbl (InFiNe.lu)
- European Microfinance Week, organised by the European Microfinance Platform (e-MFP)
IIAB - Impact Investing Advisory Board
In 2024, the Luxembourg Sustainable Finance Initiative (LSFI) launched the Impact Investing Advisory Board (IIAB). The initiative brings together sector leaders to share knowledge and tackle persistent barriers, such as limited data transparency, market intelligence, and performance insights.
ICFA - Accelerating Climate Action
Climate and energy funds account for 28% of Luxembourg’s total AUM. Since the formation of the Climate Finance Task Force in 2015, Luxembourg has strengthened its position as a global hub for green finance. One flagship initiative is the International Climate Finance Accelerator (ICFA), launched in 2018. To date, ICFA has supported:
- 39 emerging fund managers
- 14 launched funds
- USD 450 million mobilised for climate action
- EUR 9.5 million in direct financial support
Broadening the Scope: Advancing Social Finance through ISFA
Building on the success of the ICFA, the International Social Finance Accelerator (ISFA) was launched in 2024. This new programme is designed to align with Luxembourg’s development cooperation priorities—specifically promoting human rights, gender equality, and environmental sustainability.
Why Supporting Emerging Fund Managers Matters?
Emerging fund managers developing innovative, small-scale vehicles often face significant financial and administrative hurdles. By fostering public-private partnerships and creating tailored support structures, Luxembourg ensures these actors can scale their contributions to climate resilience and social advancement. A coordinated support framework—co-designed by stakeholders across sectors—has proven to be the most effective way to meet this critical market need.
