With the COP21 Paris Agreement delivering the first ever legally-binding climate change deal, Luxembourg demonstrates its commitment to widening access to climate finance. The Luxembourg Stock Exchange listed its 100th Green Bond on February 18th 2016. The bond was issued by the European Investment Bank (EIB), the world’s largest issuer of Green Bond, with a total of €12.9bn raised.
LuxSE is the leading global exchange for Green Bonds with100 green bonds listed in 19 currencies by 20 issuers. Moreover, in 2007, the world’s first Green Bond was issued and listed by the EIB in Luxembourg, effectively kick-starting the green bond market. In terms of volume, Luxembourg has a 50% market share of all Green Bonds listings, worldwide. Total outstanding issues to date are worth some 80bn USD.
Pierre Gramegna, Minister of Finance in Luxembourg said: “Initiatives to make the green bond market more attractive are flourishing in financial centres. Luxembourg’s financial expertise coupled with its ability to attract competences around new growing areas of business, will certainly translate into a business-friendly climate finance toolkit as the market matures. In this context, LuxSE is likely to play a pivotal role, propelling the growth of the green bond market in Luxembourg by incentivising appropriate disclosure.”
Robert Scharfe, CEO of the Luxembourg Stock Exchange, added: “This is an important moment for the green bond market. We recognise EIB’s outstanding contribution to the evolution of green standards and commit to further accompany green issuers in the next phase of the market.”
As a response to the increasing demand for transparency and accountability from investors, Green Bonds play a distinctive role in scaling-up the market as they facilitate impact reporting on environmental outcomes and increase investor confidence.
The highly developed, cross-border nature of its financial sector enables Luxembourg to act as an international center for climate finance. Luxembourg has a leading global capital market infrastructure, ranging from listing to post-trade services. It also has a comprehensive ecosystem of highly specialised service providers, able to assist international clients in equity and debt securities offerings, while helping them develop new products and structures.
As the global leader for cross-border investment funds, Luxembourg provides a wide range of tried and tested investment structures that permit the use of public funding to leverage private sector investment for climate action in Europe and beyond.
Luxembourg has the largest market share of investment funds with environment strategies, representing 37% of all such vehicles in Europe. Within this sector, Luxembourg has 69% of AuM in funds with a renewable energy theme and over two-thirds of all AuM in the remaining environment related strategies. In addition, 67% of global AuM in European impact funds are domiciled in Luxembourg.
Luxembourg strives to provide clarity for responsible investors. LuxFLAG, an independent labeling agency, awards labels to funds that meet specific criteria in the areas of microfinance, environmental projects and ESG.
The listing of the 100th green bond in Luxembourg adds to Grand Duchy’s proven track record in helping global efforts to develop climate finance.