News - 10.09.2020

First European country to launch a Sustainability Bond Framework

  • Sustainable Finance

Luxembourg becomes the first European country to launch a Sustainability Bond Framework. This innovative framework, which meets the highest market standards, is also the first in the world to fully comply with the new recommendations of the European taxonomy for green financing.

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This reference framework will focus on green, social or sustainable bonds, combining ecological and social benefits.

The revenues obtained through these bonds will be invested by the government in new sustainable projects, such as the construction of green housing, the energy transition, the development of low CO2 emission transport or more efficient water management, or to refinance existing loans should they meet the criteria. The proceeds will also be used to finance social projects in sectors such as health, education, affordable housing or the labour market.

Pierre Gramegna, Minister of Finance, said: “I welcome the launch of this new Sustainability Bond Framework, which is at the forefront of innovation in financing, and will enable the country to consolidate its position as a centre of excellence in the field of responsible, sustainable and innovative finance.

Living up to its reputation as a first-mover, Luxembourg has also incorporated eligibility criteria that are already fully in line with the recommendations of the final report of the Technical Expert Group (TEG) on the Taxonomy of the European Union. In the same spirit, the framework has been designed to comply with the draft European Green Bonds Standard (EU GBS).