Luxembourg: breaking new ground in sustainable finance
The Luxembourg Green Exchange (LGX), the world’s first and only platform dedicated exclusively to green securities, is opening a new segment dedicated to sustainable and social projects bonds, a sector valued at over US$23trn, as it looks to broaden the universe of socially responsible instruments listed on its platform.
The new segment on the Luxembourg Stock Exchange will increase the visibility of Sustainable and Social (S&S) projects and facilitate their financing.
The Luxembourg Stock Exchange launched its LGX platform in September 2016 and now lists over €50bn of Green bonds from 27 international issuers. Due to the flexibility offered by sustainable bonds, allowing for a much broader range of projects than just Green, they are likely to produce a larger market. For the same reasons, they can attract more corporates to issuing such instruments.
In recent years the financial markets have developed instruments that are specifically designed to raise public money for development goals. Luxembourg has been at the forefront of this development.
Luxembourg’s is playing a leading role in driving forward sustainable finance:
- The Green Bond capital of the world: Over 50% of all green bonds are listed in Luxembourg. Thanks to LGX, the Luxembourg Stock Exchange provides issuers and investors with an environment where they can come together to fulfill their green objectives.
- The leading European sustainable investment funds domicile: Luxembourg plays a prominent role in the European responsible investment fund industry, accounting for 31% of funds and 39% of all assets under management. Furthermore, two out of every three impact investment funds in Europe are domiciled in the Grand Duchy. Offering an ideal environment and the right expertise to support the sustainable finance industry, Luxembourg was recently chosen by the International Finance Corporation (IFC) to set up the world’s largest green bond fund, a USD 2bn fixed income fund dedicated to emerging markets.
- Finance labelling: Luxembourg is home to LuxFLAG, the finance labelling agency, providing clarity, and confidence to investors in sustainable investment funds and international financial instruments. LuxFLAG recently launched a dedicated climate finance label and will soon launch a green bond label.
- A global leader in microfinance: Luxembourg has a history of pioneering in the microfinance sector. Today, 61% of all global microfinance fund assets are domiciled in the Grand Duchy, which plays a crucial role in the financing of microfinance institutions in Africa, Latin America and other parts of the world.
- In a pioneering move to encourage private investments into projects to mitigate and adapt to climate change, the Luxembourg government has partnered up with the European Investment Bank to launch a climate finance platform supporting high-impact climate action projects.
On Tuesday, 23 May 2017, Luxembourg will participate in the FT Climate Finance Summit in London. The Summit, titled “Scaling up Finance for Climate Action”, explores the vital role of international finance in global efforts to combat climate change, as well as the risks and opportunities for businesses, financial markets and investors in the new climate economy.
Luxembourg for Finance also recently launched a new publication on sustainable finance, which provides an insight in the multiple services offered by the Luxembourg financial centre.