IFC chooses Luxembourg as domicile for major Green Bond fund
The International Finance Corporation IFC, together with asset manager Amundi, have announced to create the world’s largest green-bond fund dedicated to emerging markets, the Green Cornerstone Bond Fund. The USD 2bn fixed income fund will be domiciled in Luxembourg.
The fund will buy green bonds issued by banks in Africa, Asia, the Middle East, Latin America, Eastern Europe and Central Asia. IFC will invest USD 325 million, while Amundi will raise the rest from institutional investors worldwide. The fund will deepen new green capital markets in countries where such a market was non-existent so far.
“As strategic partner of Green Cornerstone Bond Fund, Luxembourg demonstrates its strength as a financial centre and accepts its responsibilities in the fight against climate change”, Luxembourg Finance Minister Pierre Gramegna said.
Luxembourg is a European frontrunner in green finance and offers a comprehensive green toolbox. As the second largest investment fund centre globally, it is the domicile of 2/3 of European impact investment funds and almost 40% of European responsible funds. The Finance Labeling Agency LuxFLAG offers a Climate Finance label for investment funds with sustainable strategies and will soon launch a Green Bond label.
The Luxembourg Green Exchange LGX is the first exchange dedicated to green securities. More than 50% in AuM in global green bonds are listed at the LGX. The world’s first green bond was listed on the Luxembourg Stock Exchange LuxSE in 2007.
The Luxembourg government is firmly committed to supporting green finance: it has entered a partnership with the European Investment Bank (EIB) to set up a joint Climate Finance Platform, aiming to mobilise investments for projects with a strong impact in the fight against climate change. Luxembourg is the first Member State to enter into such a partnership for innovative climate finance with the EIB. Furthermore, Luxembourg is planning to set up a public-private climate finance accelerator to help innovative climate savvy fund managers to launch their funds.
As a member of the World Bank Group, the IFC is one of the world’s largest financiers of climate-smart projects for developing countries, providing financing over the last decade for renewable power, energy efficiency, sustainable agriculture, green buildings and private sector adaptation to climate change. The IFC also is one of the earliest issuers of green bonds, launching a green bond program in 2010 to help catalyze the market and unlock investment for private sector projects that support renewable energy and energy efficiency.