LHoFT and SnT Launch AI-Powered Sustainable Finance Research Project
The Luxembourg House of Financial Technology (LHoFT) has initiated a research program with the Luxembourg University’s SnT Centre that will leverage artificial intelligence to transform how financial institutions handle Environmental, Social, and Governance (ESG) data. The research program seeks to further strengthen Luxembourg’s position as a leading sustainable finance hub.. The program will be led by the renowned Professor Radu State at the University of Luxembourg, and steered by Oriane Kesmann, Research Manager at the LHoFT, with support and guidance from the Luxembourg Sustainable Finance Initiative (LSFI) and the Luxembourg Stock Exchange (LuxSE).
The research program comes at a crucial time when financial institutions across the Grand Duchy are grappling with incorporating ESG metrics into their investment frameworks amid tightening EU regulatory requirements. The program will deliver practical AI solutions that simultaneously satisfy compliance demands and advance broader sustainability objectives for Luxembourg’s financial sector, seeking to quantify the value of ESG practices and adherence in relation to financial benefits, particularly Cost of Capital.
Nasir Zubairi, CEO of the LHoFT Foundation, commented: “As sustainable finance moves from aspiration to obligation, financial institutions need smart, scalable tools that enable them to provide the right solutions in the most effective way. This collaboration seeks to leverage AI to help the Industry meet requirements and hopefully to go beyond by creating a lever to use with their market. We want to do our part in helping Luxembourg stay ahead in sustainable finance through real, applicable innovation.”
University of Luxembourg SnT Professor Radu State, remarked: “Together with my team, we are excited to collaborate with LHOFT and LSFI on a challenging research project that addresses a real need in the industry and aims to leverage the recent advances in Generative AI. I’m confident that our project will generate knowledge, lead to practical technology transfer and potential entrepreneurial outcomes and will solve pain points in the current operational landscape. Furthermore, the interdisciplinary nature of the project, bringing together multiple stakeholders ranging from finance, computer science, and sustainability, is an intellectually rewarding process with an unlimited potential for our financial place and its positioning.”
Nicoletta Centofanti, CEO of the LSFI, added: “New fintech-AI driven tools dedicated to sustainable finance can help financial institutions address challenges and identify opportunities—particularly in areas like data gathering, regulatory compliance, and impact measurement. In line with LSFI’s mission and strategy to unlock potential and mobilise the financial sector in sustainable finance, we will support this research project at every stage, providing expertise in both sustainable finance and the evolving needs of the industry.”
Specifically, the research project aims to address four key challenges in sustainable finance:
- Advanced ESG Data Acquisition: Implementing natural language processing to extract sustainability insights from diverse and unstructured data sources
- Automated Regulatory Compliance: Creating tools that streamline sustainability reporting in alignment with SFDR RTS, PAI, and ESRS standards
- Predictive ESG Analytics: Developing sophisticated AI models that enhance the accuracy of predicting ESG impacts on financial performance
- Scenario Testing for Sustainability: Building simulation and causal AI models to assess how ESG compliance affects cost of capital under various conditions
The project represents Luxembourg’s continued leadership in both sustainable finance and financial technology innovation. Results and tools developed through this partnership will be made available to Luxembourg’s financial sector, reinforcing the country’s position as a global hub for responsible finance.
For more information about this initiative or partnership opportunities, please contact:
- Radu State, Professor at University of Luxembourg, SnT – [email protected]
- Oriane Kaesmann, Research Manager at LHoFT – [email protected]
About LHoFT: The Luxembourg House of Financial Technology (LHoFT) is Luxembourg’s dedicated fintech platform where finance and technology interact to foster innovation and develop solutions to shape the future of financial services.
About SnT: The Interdisciplinary Centre for Security, Reliability and Trust (SnT) at the University of Luxembourg conducts internationally competitive research in information and communication technology, with an emphasis on creating socio-economic impact.
About LSFI: The LSFI is Luxembourg’s coordinating entity on sustainable finance, driving change across the whole ecosystem as a Centre of Excellence and Knowledge Hub, supporting the financial sector to accelerate the financing of the transition, and measuring progress.
