1. Agenda 1. What is SRI? 2. Is SRI a growth sector and an interesting segment? 3. If it is, what action should Luxembourg be taking?

2. Defining SRI Defining SRI is no easy task. But defining what SRI is not might be easier. This is the Via Negativa or apophatic approach.

3. Defining SRI Some sarcastic views on money and its powers… Money is better than poverty, if only for financial reasons. Woody Allen Jai un copain qui a fait un mariage damour. Il a épousé une femme riche. Il aimait largent. Coluche

4. Defining SRI A question can be raised : Does SRI come down to puritanism by banning tobacco, alcohol and more generally any behaviour, product and service deemed to be bad?

5. Defining SRI Utilitarian approach : Does SRI come down to being the most efficient use of limited resources (by preventing waste of raw material, minerals, farming products, energy, biodiversity, personnel…)?

6. Defining SRI A more positive and SRI-compliant approach is as follows: Sustainability investing is the explicit recognition that social, economic, environmental and ethical factors directly affect business strategy - for example, how companies attract and retain employees, how they manage the risks and create opportunities from climate change, a companys culture, corporate-governance standards, stakeholder-engagement strategies, philanthropy, reputation, and brand management. David Blood, former Head of Goldman Sachs Asset Management and Co - founder with Al Gore of Generation Investment Management, (in an interview given to McKinsey consultants, May 2007)

7. Defining SRI – principles of justice Two Basic Principles of Justice (as defined by John Rawls (in his book A Theory of Justice, 1971) 1.Each person should get an equal guarantee to as many different liberties--and as much of those liberties--as can be guaranteed to everyone else at the same time. 2.Inequalities in society are okay only if they are arranged so that the inequalities actually help out the least fortunate persons in society and the inequalities are connected to positions or offices or jobs in society that everyone has an equal opportunity to attain.

8. Defining SRI – the common good Another valuable concept in terms of SRI is the common good (French = bien commun)... A culture of the common good is one in which people look out for each other and concern for one another is reflected in our corporations, communities and government. Related core values are : responsibility, solidarity, subsidiarity, and dignity.

9. Growth drivers SRI is a growing trend Nobel Prizes awarded last year to Muhammad Yunus and this year to Al Gore and the Intergovernmental Panel on Climate Change more products available and increasing assets under management (1,030 billion under management in Europe as of December 2005 – up 36% compared to 2003)

10. Growth drivers Buy side: institutionals (pension funds such as Environment Agency pension Fund, Fonds de Réserve des Retraites, Norwegian Pension Fund), retail Sell side: widening range of products (SRI funds,microfinance funds, EIB 2007-2012 Climate Awareness bonds, 2006-2011 Intl Finance Facility for Immunisation Company…), developments of methodologies, rating agencies, standards

11. SRI awareness is increasing in Luxembourg Plan national pour le développement durable (April 1999) Proposition de loi visant à favoriser les investissements à caractère éthique, solidaire ou écologique au moyen de la promotion de lépargne mobilière – tabled by MP François Bausch on 13 November 2001 Law of 25 June 2004 (loi relative à la coordination de la politique nationale du développement durable) creating a Conseil Supérieur pour le Développement Durable and a Commission Interdépartementale du Développement Durable)

12. SRI awareness is increasing in Luxembourg Signature of a Corporate Social Responsibilty charter by a number of private-sector players (2006) Creation of the Institut du Mouvement Sociétal by members of the private-sector community (April 2007) Introduction of corporate governance guidelines by the Luxembourg Stock Exchange (2006)

13. SRI awareness is increasing in Luxembourg Creation of LuxFLAG (July 2006) Fair trade awareness is rising Currently, some 60 Luxembourg investment funds are classified as SRI funds (source : CCLux, ETIKA SRI Guide). AUM = approximately 7 billion.

14. History of the ALFI SRI Working Group Established in 2003 and has met regularly ever since Largely contributed to the creation of LuxFLAG (Luxembourg Fund Labelling Agency) in 2006 Supports the ETIKA Luxembourg SRI Guide More generally, operates as an SRI-oriented think tank

15. Luxembourg and SRI – a good trade-off Image/reputation Internal/domestic International Recognised expertise : investment funds, tax & legal, microfinance, data collection and distribution (CCLux, www.cclux.lu) Luxembourg, one of the least corrupt countries in the world ( source : Transparency International, 2006 ) Adequate positioning of Luxembourg

16. Actions Creating an SRI-friendly environment Incentives based on foreign models PR / communication (Government, public bodies, pension agencies, industry) – more needs to be done Setting standards (replication of the LuxFLAG label model? Definition of SRI branding – by law or on a voluntary/self-regulatory basis?)

17. Thank you.