OECD Development Co‑operation Peer Reviews: Luxembourg 2025

Annex B. Progress against OECD legal instruments under the responsibility of the DAC

Recommendations adopted by the Development Assistance Committee (DAC)

Recommendation on Terms and Conditions of Aid [OECD/LEGAL/5006]

Luxembourg is committed to achieving a number of international targets and complying with DAC standards and recommendations. Luxembourg consistently devotes around 1% of its gross national income (GNI) to ODA, and has been exceeding the 0.7% target set by the United Nations since 2000. It is therefore meeting its national commitment of 1% and its European commitment to collectively reach an ODA/GNI ratio of 0.7% by 2030. In 2022, it provided all its ODA in the form of grants.

Table A B.1. Performance against commitments and DAC recommendations

Description	Target	2021	2022	2023, preliminary data
ODA as a proportion of GNI (%)	0.7	0.99	1.00	0.99
Total ODA to least developed countries, as a percentage of GNI (%)	0.15–0.20	0.45	0.46
Share of untied ODA targeted by DAC recommendation (%)	100	100	100
Share of untied ODA (all sectors and countries combined, beyond the scope of the Recommendation on Untying ODA) (%)		94.2	90.8
Grants as a proportion of total ODA (%)	>86	100	100

Note: ODA: official development assistance; DAC: Development Assistance Committee; GNI: gross national income. The information presented in this table relates solely to DAC recommendations concerning ODA data.

Source: OECD (2024[1]), Development Co-operation Profiles, https://doi.org/10.1787/2dcf1367-en.

DAC Recommendation on Untying Official Development Assistance [OECD/LEGAL/5015]

In 2022, 100% of ODA to countries and territories covered by the DAC Recommendation on Untying ODA was notified as untied (OECD, 2022[2]).

DAC Recommendation on the Humanitarian-Development-Peace Nexus [OECD/LEGAL/5019]

Luxembourg has introduced mechanisms that show progress in implementing the DAC Recommendation on the Humanitarian-Development-Peace Nexus (HDP). The inclusion of humanitarian elements in the 2021 ICP for Niger is a concrete demonstration of this progress. When there are constant acute vulnerabilities in a deteriorating security context, humanitarian assistance becomes an integral part of Luxembourg's engagement in a country. At the same time, the great flexibility of humanitarian or financial budgets strengthens coherence and complementarity in dynamic and pragmatic administration, in the spirit of the Recommendation. These efforts are evident in the partner countries, for example in Niger before bilateral cooperation was suspended. The Luxembourg embassy played a key role in co-ordinating actions between LuxDev, the International Committee of the Red Cross (ICRC) and the Luxembourg Red Cross, particularly in the water sector. Luxembourg's role in supporting food security for the most vulnerable, through a wide range of partners, is also aligned with the three themes of the Recommendation.

Co-ordination efforts, both internally and with other humanitarian assistance actors, are in line with the Recommendation. Luxembourg remains a highly flexible humanitarian donor, appreciated by all its strategic and operational partners.

While Luxembourg is a recognised actor in the key area of local mediation and support for human rights, its programming policy does not mainstream this "peace" dimension. Although co-ordination between humanitarian assistance and development co-operation is important, it is the introduction of the peace dimension that represents the major innovation of the HDP nexus approach in the Recommendation. Development co-operation is an integral part of Luxembourg's foreign policy, and the provision of development co-operation and humanitarian assistance based on humanitarian principles forms part of this foreign policy. Luxembourg's commitment can therefore contribute to stability, crisis prevention and peace, thanks to an approach based on and encompassing every aspect of the HDP nexus.

As Luxembourg works in some of the most fragile contexts, notably in its partner countries, the Lao People's Democratic Republic and Nicaragua, the mid-term review encouraged the adoption of a comprehensive approach to fragility. Global risk management beyond LuxDev also remains a challenge. Luxembourg could strive to systematically integrate the HDP nexus into all of its co-operation programmes.

DAC Recommendation on Ending Sexual Exploitation, Abuse, and Harassment in Development Co-operation and Humanitarian Assistance: Key Pillars of Prevention and Response [OECD/LEGAL/5020]

The gender strategy of Luxembourg's development co-operation programme emphasises zero tolerance of sexual and gender-based violence (MAE, 2021[3]). The country adopted a specific policy on sexual exploitation, sexual abuse and sexual harassment in 2022, demonstrating a formal commitment to combating these types of abuse. This policy is embodied in a charter against sexist and sexual violence, exploitation and abuse, to which all non-governmental development organisations wishing to obtain or renew ministerial approval must adhere, regardless of the country in which they operate. Adherence to this charter is a prerequisite for receiving grants from Luxembourg's development co-operation programme. This reinforces ethical standards and standards of protection in partner countries.

Luxembourg has also put in place mechanisms to disseminate this recommendation, including specific awareness-raising efforts aimed at relevant staff, and national initiatives targeting development, humanitarian and peacebuilding agencies and their partners. Partners are required to complete a UNICEF training course on sexual exploitation, sexual abuse and sexual harassment and pass a test to be eligible for grants.

Luxembourg's international collaboration, including co-operation with other DAC members and implementing partners, has also been strengthened. This is crucial for standardising the levels of support available to survivors and victims, and for managing investigations and producing reports. However, improving the collection and use of data, including data disaggregated by sex and age, remains a priority to better detect trends and fill persistent gaps. Luxembourg could also benefit from strengthening the independent evaluation of the progress and impact of its initiatives, as well as better documentation and the dissemination of best practices and lessons learned.

Luxembourg's efforts to implement a victim/survivor-centred approach have also been mixed: although complaint mechanisms are in place for staff and implementing partners, as well as internal procedures for dealing with substance abuse incidents, clear guidelines and minimum standards for assistance, reparation or support to victims and survivors are non-existent. This gap is an obstacle to providing adequate protection and support for the people concerned. Furthermore, the absence of clear guidelines for staff on reporting procedures and incident response makes it more difficult to co-ordinate actions and reduces their effectiveness. In particular, no systematic background, reference or criminal record checks are carried out during the employment cycle, meaning that is impossible to prevent people with a history of misconduct from being hired.

DAC Recommendation on Enabling Civil Society in Development Co-operation and Humanitarian Assistance [OECD/LEGAL/5021]

To respect, protect and promote civic space, Luxembourg relies on The Road to 2030 strategy, which emphasises the importance of an inclusive and independent civil society. Luxembourg has developed clear policy positions in support of civic space and basic freedoms. It aims to channel around 20% of its official development assistance (ODA) through NGOs and civil society actors, helping to strengthen their role in promoting inclusive governance and human rights. In addition, contractual frameworks and funding arrangements, such as multi-year framework agreements and biannual calls for projects, have been established to support humanitarian and development NGOs.

From 2021 to 2023, total contributions to civil society organisations (regular budget and earmarked contributions) increased as a percentage of bilateral ODA, rising from 28.9% to 30.2% before returning to 28.1%. According to the most recent statistics from the Ministry of Foreign Affairs, by 2023 contributions had fallen again to 27.1% of bilateral ODA, remaining well above the government's 20% target. However, only 2.4% of gross bilateral ODA directed to civil society organisations in 2023 was earmarked for such organisations based in developing countries, suggesting that there is scope for increasing direct funding of civil society organisations in developing countries.

In terms of support and engagement with civil society, Luxembourg actively involves civil society organisations in developing policies and programmes to foster inclusive sustainable development. Inclusive dialogues are established, as was the case when the Indicative Co-operation Programme (ICP) was drawn up with Cabo Verde. Luxembourg also supports the Global Education Network Europe (GENE) and funds projects to raise awareness of education for sustainable development. For example, in 2021, Luxembourg contributed an additional EUR 100 000 to the GENE sustainability fund and to the GE2050 Declaration.

To promote accountability and efficiency, Luxembourg emphasises long-term institutional support, as, for example, in its work with ENDA Tiers Monde in Senegal, focusing on advocacy and development research. This support is aimed at strengthening organisational sustainability despite the challenges posed by the diversification of funding sources. In addition, Luxembourg encourages aid localisation in humanitarian projects, requiring NGOs to include local capacity-building components, enabling local organisations to improve access to interventions and make them more effective, especially in conflict contexts. However, this effort could be extended to development and peacebuilding projects in line with the HDP nexus. By further integrating aid localisation into these initiatives, Luxembourg would strengthen the coherence of its approach while fostering greater local ownership. This is vital for a sustainable transition towards resilience and stability in fragile contexts.

Luxembourg could also step up its efforts to diversify funding sources for civil society organisations to ensure that they are sustainable. In addition, the development of additional guidelines and toolkits for implementing this recommendation, particularly in terms of co-ordination and collaboration between levels of government, could strengthen the impact of initiatives. Finally, strengthening the capacity of civil society organisations to measure and demonstrate the impact of their interventions could further improve the effectiveness and transparency of funded projects.

Recommendations adopted by the OECD Council under the responsibility of the DAC (jointly with other OECD committees)

Recommendation of the Council on Policy Coherence for Sustainable Development [OECD/LEGAL/0381]

Luxembourg demonstrates a high level of political commitment to implementing the Recommendation of the OECD Council on Policy Coherence for Sustainable Development. This commitment is reflected in ministerial strategies, which are maintained independently of electoral cycles thanks to the Interdepartmental Commission on Sustainable Development and the Interministerial Committee for Development Cooperation (CID). These bodies also play a crucial role in implementing the National Plan for Sustainable Development (PNDD). Regular meetings of the CID and the Commission provide an opportunity to discuss the impact of national policies on developing countries, ensuring greater horizontal coherence across policies. The small size of the government and the two-party coalition are additional factors that support co-operation between ministries. However, the lack of expertise among decision makers and the difficulty involved in effectively communicating the benefits of policy coherence across different government departments pose challenges. In addition, improved interaction between the Commission and the CID would make existing collaboration mechanisms more effective, notably through joint meetings focused on identifying synergies and trade-offs, as well as better co-ordination of major sustainable development strategies, which are sometimes still fragmented.

There is a strong institutional framework for sustainable development in Luxembourg, with the PNDD proving to be an essential tool for promoting coherent economic, social and environmental policies. The recent introduction of the sustainability check aims to improve policy coherence by assessing the potential national and cross-border impacts of proposed policies. However, for this tool to be effective, its application must be systematic and mandatory. This must be accompanied by comprehensive training for civil servants so that they can make effective use of sustainability indicators and apply systems thinking to policy making.

Stakeholder participation plays a key role in Luxembourg's policy coherence efforts. Internationally, the government works closely with national stakeholders in partner countries to ensure that bilateral programmes are in line with local priorities. At the national level, initiatives such as "Luxembourg en transition" and "Klima-Biergerrot" demonstrate the country's commitment to involving citizens in policy making. This helps to build trust and generate a variety of ideas to promote sustainable development. The annual Education for Sustainable Development Fair and the Communes 2030 tool enable municipalities to evaluate and promote their sustainable development initiatives, thus contributing to greater vertical policy coherence. However, the systematic integration of these initiatives remains a challenge. More co-ordinated and continuous application is needed at all levels of government to ensure that the views of key stakeholders are included in key documents.

Luxembourg has made significant progress on monitoring, reporting and evaluation. The 2022 Voluntary National Review presented the country's progress and challenges in terms of sustainable development at the international level. Partnerships with the private sector and research institutes, such as the Luxembourg Institute of Socio-Economic Research (LISER), strengthen the country's capacity to analyse and assess policy impacts. The creation, in partnership with LISER, of a Research Unit on Impact Evaluation of Development Policies shows that Luxembourg is committed to rigorously assessing the impact of its interventions. To maximise the effectiveness of these initiatives, it is essential that the country continues to invest in developing sophisticated assessment tools and keeps improving co-ordination between the various government agencies and NGOs.

Finally, the work that Luxembourg is doing on sustainable financing, including its leadership on green and inclusive finance, demonstrates its commitment to integrating sustainability into business practices. However, it could make these initiatives more effective through more strategic use of policy coherence tools, such as aligning the budget process with the SDGs and integrating sustainability criteria into public procurement. The sustainability check offers an opportunity to integrate these principles into all government actions, but its impact will depend on it being systematically applied and on efforts being made to build capacity.

Recommendation of the Council for Development Co-operation Actors on Managing the Risk of Corruption [OECD/LEGAL/0431]

Lux-Development S.A. (LuxDev), the Luxembourg agency for development co-operation, revised its code of conduct in 2021 to clearly include corruption reporting requirements. All employees are now required to adhere to this code annually, and regular training sessions on fraud prevention are held. In terms of control mechanisms, LuxDev has set up a fraud reporting system. This enables any member of staff or third party to anonymously report acts of corruption via a specific e-mail address and a web portal. LuxDev projects are subject to rigorous internal controls and independent external audits, ensuring operational transparency and compliance.

LuxDev has also developed a control mechanism tailored to the risk contexts in the countries where it operates. This includes preventive measures, training actions, and ex ante and ex post controls. All bidders participating in invitations to tender must submit a sworn statement, and delegated partners are subject to a preliminary assessment of their administrative and financial management capabilities. LuxDev's risk management and internal control procedures are regularly assessed by independent external audits, encouraging continuous learning and improvement of internal processes. LuxDev's control mechanism has been specifically designed to take account of the context in which it operates (high-risk countries). It is deployed in all countries where LuxDev operates, and includes preventive, awareness-raising and training measures, as well as ex ante and ex post controls, to which are added internal and external reporting and whistle-blowing procedures. The agency is also an active participant in networks for sharing best practices, such as the network initiated by the European Anti-Fraud Office, which helps to strengthen methodologies and standardise practices across EU organisations.

However, these measures were deemed insufficient in the context of the Phase 4 report on implementation of the OECD Anti-Bribery Convention, for a number of reasons. Firstly, LuxDev only uses the European Commission's Early Warning and Exclusion System (EDES) and the EU Sanctions Map to assess potential partners and minimise the risk of collaborating with entities of concern. It does not consult the World Bank or United Nations exclusion lists, thus limiting the effectiveness of its verification mechanism. Secondly, the declarations of integrity that bidders are required to submit do not take into account non-judicial resolutions passed in foreign jurisdictions and are mainly declarative, reducing their scope and impact. Thirdly, despite improved reporting channels, LuxDev was unable to identify incidents of foreign bribery. Finally, LuxDev's contractual anti-corruption measures do not apply to its partners and subcontractors, leaving potential loopholes in its anti-corruption framework (OECD, 2024[4]).

In fact, apart from the use of the EDES system, LuxDev currently has no formal measures to prevent and detect corruption before awarding ODA contracts. Additionally, there is no formal mechanism in place to verify that the information provided by applicants is accurate, or check that they have adequate internal due diligence systems in place. Finally, LuxDev's APD contracts do not explicitly include a clause prohibiting partners from engaging in acts of corruption.

Several other challenges remain. Although specific training courses are in place, it would be useful to develop more interactive and contextual modules, tailored to the realities of the countries in which LuxDev operates, to improve awareness of the risks of corruption. There is a need to refine the sanctions regime to ensure that sanctions are proportionate and based on precise, impartial processes and criteria. It would also be advisable to implement more rigorous monitoring and evaluation of measures designed to prevent corruption. The adoption of new technologies for tracking reports and audits could improve the efficiency and speed of responses to incidents of corruption. Increased commitment and collaboration on the part of local stakeholders and international partners to share information, best practices and resources is vital for building local capacity to manage corruption risks.

Recommendation of the Council on Environmental Assessment of Development Assistance Projects and Programmes [OECD/LEGAL/0458]

Close collaboration between the Directorate for Development Cooperation and Humanitarian Affairs and the Ministry of the Environment, Climate and Biodiversity (MECB) is reflected in financial contributions, particularly in partner countries where funding to combat and mitigate the harmful effects of climate change reinforces Luxembourg's development co-operation programming. For example, LuxDev helped the Cabo Verde Ministry of Agriculture and Environment to draft the Cabo Verde National Adaptation Plan (Ministry of Agriculture and Environment, Cabo Verde, 2021[5]) and is supporting the country in climate negotiations and in strengthening its institutional capacity, including by seconding specialist advisors to help civil servants assess the impact that projects, programmes or policies could have on the environment.

Under the 2023-28 government coalition agreement in Luxembourg, co-operation with partner countries on environmental and climate issues is set to increase, to offer practical help to these countries with improving their resilience (Gouvernement du Grand-Duché de Luxembourg, 2023[6]). The sustainability check, which assesses Luxembourg's legislation in terms of its impact on sustainable development, includes an important section on environmental degradation and respect for natural resources (Gouvernement du Grand-Duché de Luxembourg, 2023[7]).

Environmental sustainability is a cross-cutting theme in Luxembourg's General Development Cooperation Strategy (MAE, 2019[8]), and features in all of its ICPs. Sector strategies and national regulatory frameworks mandate Luxembourg to carry out a strategic environmental and social assessment for development assistance activities in virtually all its partner countries. This is done in conjunction with national authorities and other technical and financial providers.

In 2021-22, 27.5% of Luxembourg's total bilateral allocable aid commitments (USD 91.3 million) were focused on the environment and the Rio conventions (the DAC average is 35.1%). This proportion has increased from 15% in 2019-20. Environmental data can be broken down as follows:

• Environmental issues were the main focus of 4% of the bilateral allocable aid reviewed, compared with a DAC average of 11%.

• Twelve per cent of total bilateral allocable aid (USD 40 million) was focused on climate change in general, up from 4% in 2019-20 (the DAC average is 30.5%). In 2021-22, Luxembourg directed more of its funding towards climate change adaptation (11.7%) than towards mitigation (5.8%).

• Four per cent of the bilateral allocable aid reviewed (USD 11.5 million) was focused on biodiversity in general, down from 8.1% in 2019-20 (the average for DAC countries is 7.2%).

OECD DAC Declaration

DAC Declaration on a new approach to align development co-operation with the goals of the Paris Agreement on Climate Change [OECD/LEGAL/0466]

The Road to 2030 strategy recognises that the impacts of climate change are not gender-neutral, and that certain population groups are more exposed than others to these global environmental changes (MAE, 2019[8]), while the coalition agreement lists commitments and actions to be taken (Gouvernement du Grand-Duché de Luxembourg, 2023[6]). The Directorate for Development Cooperation and Humanitarian Affairs Environment and Climate Change Strategy is committed to adhering to the European Green Deal, adopted at the end of 2019, which aims to make the EU's economy sustainable and climate-neutral by 2050, as well as to the EU's climate and energy targets in its recovery plan (MAE, 2021[9]). Finally, Luxembourg is adopting a systematic horizontal integration of the gender, environment and climate nexus into all aspects of its co-operation work, accompanied by sector-specific guidelines and fact sheets for water and sanitation, education and vocational training, and health projects (Box 1).

Beyond its co-operation work, in 2021 Luxembourg adopted an International Climate Finance Strategy covering 2021-25. This Climate Finance Strategy also covers biodiversity and has the dual objective of contributing to international efforts to combat climate change and consolidating Luxembourg's role as an international centre for climate finance (MECB, 2021[10]). Luxembourg allocates EUR 220 million to climate change mitigation and adaptation activities in developing countries. These funds, managed by the MECB, are in addition to Luxembourg's ODA and are not counted as ODA.

Luxembourg directs more of its funding towards climate change adaptation than mitigation, and supports the national adaptation plans of partner countries and small island developing states. For example, Cabo Verde, a priority country for Luxembourg, is not on the list of countries categorised as "least developed" or "low-income", and is therefore not eligible for the additional financial and human resources reserved for the poorest countries. Nevertheless, and in line with Paragraph 17 of the Declaration, Luxembourg is committed to helping Cabo Verde gain access to climate financing, by providing long-term institutional support. For example, it encourages the government and key stakeholders to put projects into action, mobilise external resources (e.g. from the Global Environment Facility) and communicate progress and results.

Luxembourg's finance industry, in particular the LGX, is helping to mobilise private capital to fund sustainable development and the transition to carbon neutrality. The country's support for the blue economy in Cabo Verde, with the listing of a blue bond on the LGX, is an example of how it is fulfilling its various commitments.

References

[6] Gouvernement du Grand-Duché de Luxembourg (2023), Accord de coalition 2023-2028, https://gouvernement.lu/fr/publications/accord-coalition/accord-de-coalition-2023-2028.html.

[7] Gouvernement du Grand-Duché de Luxembourg (2023), Nohaltegkeetscheck, https://nohalteg.public.lu/fr/nohaltegkeetscheck.html.

[9] MAE (2021), Stratégie environnement et changement climatique de la Coopération luxembourgeoise, Direction de la coopération au développement et de l’action humanitaire, https://cooperation.gouvernement.lu/fr/publications/brochure-livre/minist-affaires-etrangeres-europeennes/dir-cooperation-action-humanitaire/strategies-et-orientation/strategie-environnement-climatique.html.

[3] MAE (2021), Stratégie genre de la Coopération luxembourgeoise, https://cooperation.gouvernement.lu/dam-assets/publications/strat%C3%A9gies/strategie-genre/2021-2023-stratgie-genre-fr.pdf.

[8] MAE (2019), Stratégie générale de la coopération luxembourgeoise : En route pour 2030, https://cooperation.gouvernement.lu/content/dam/gouv_cooperation/publications/strat%C3%A9gies/strategie-generale/Strat%C3%A9gie-MAEE-FR.pdf.

[10] MECB (2021), International Climate Finance Strategy 2021-2025 [Stratégie internationale du financement climatique, 2021-2025], https://environnement.public.lu/content/dam/environnement/fr/climat-energie/financement-climatique-international/stratgie-fci-2021-2025-final.pdf.

[5] Ministry of Agriculture and Environment, Cabo Verde (2021), Plano Nacional de Adaptação de Cabo Verde (National Adaptation Plan of Cabo Verde), Direção Nacional do Ambiente,, https://unfccc.int/sites/default/files/resource/NAP_Cabo%20Verde_EN.pdf.

[1] OECD (2024), Development Co-operation Profiles, OECD Publishing, Paris, https://doi.org/10.1787/2dcf1367-en.

[4] OECD (2024), Implementing the OECD Anti-Bribery Convention in Luxembourg: Phase 4 Report, OECD Publishing, Paris, https://doi.org/10.1787/c328b3e7-en.

[2] OECD (2022), 2022 Report on the Implementation of the DAC Recommendation on Untying Official Development Assistance, ONE Members and Partners, https://one.oecd.org/document/DCD/DAC(2022)34/FINAL/en/pdf.