Entrepreneurship recovers in Luxembourg Strong commitment by Luxembourg’s emerging entrepreneurs to sustainability

According to the Global Entrepreneurship Monitor (GEM), entrepreneurial activities in Luxembourg have rebounded to pre-pandemic levels, both in absolute numbers and compared to other European countries. However, recent data on business creation indicate a slowdown suggesting worsening expectations about the future.

In 2023, the share of residents actively involved in starting or running a new business increased to 9.7% from a historic low of 7% recorded in 2022. The proportion of Total Entrepreneurial Activity (TEA), referring to nascent and new entrepreneurs with less than 42 months of paid activity, was higher in Luxembourg (9.7%) than in other European countries (9.2%) in 2023 (See Figure 1). Despite these positive developments, some challenges may be ahead. Recent register data indicate a slowdown in business creation, while GEM shows that business opportunities and growth expectations are worsening.

Figure 1 : Total Entrepreneurial Activity rate (% of population)

Characteristics of Entrepreneurs in Luxembourg

Innovation: Luxembourg, a "strong innovator" according to the European Innovation Scoreboard, ranks first in terms of the proportion of new entrepreneurs that declare themselves innovative (40% in Luxembourg compared to 30% on average).

Necessity: Luxembourg has a considerable lower-than-average necessity-driven entrepreneurship (47% of Luxembourg’s entrepreneurs report a business due to a lack of available jobs compared to EU average 58%).

Entrepreneurship gender gap:  Women have a lower propensity to engage in entrepreneurship. In 2023, the share of female entrepreneurs was 8.7% against 10.6% for men.

Luxembourg's entrepreneurs report strong commitment to sustainability

Sustainability reporting: In recent years, several initiatives have been introduced to encourage businesses to adopt social and environmental practices. Furthermore, the Corporate Sustainability Reporting Directive (CSRD) now requires certain companies to publish detailed sustainability reports and disclose ESG (Environmental, Social, and Governance) information. Reporting of sustainability practices has been increasing among Luxembourg's firms, which supports the view of growing sustainability awareness and commitment. The percentage of firms reporting their sustainability practices online increased from 14.7% in 2014 to 21.4% in 2022.

Profile of the Sustainable Entrepreneur: Econometric analysis suggests that there are no significant gender differences in engaging in sustainable practices among those who start new businesses. Immigrants (individuals not born in Luxembourg), have a higher chance of starting a sustainable new business.

Figure 2. Share of entrepreneurs who declare "Have taken steps to minimize the environmental impact of the business over the past year?" (% of TEA)

Luxembourg’s entrepreneurs report difficulties in accessing funding, in the availability of office spaces and human resources

Since 2016, GEM Luxembourg has asked respondents to assess the strengths and weaknesses of the Luxembourg entrepreneurial ecosystem. Early-stage entrepreneurs in Luxembourg primary concerns appear to be the availability of adequate office space (55% of entrepreneurs), funding (40%) and human resources (36%). These aspects have emerged as growing obstacles to entrepreneurial activity in the last survey wave