First Ever Sovereign Green Bond Listed By Luxembourg

The world’s first sovereign green bond has resulted in the reaffirmation of Luxembourg’s position as a leading global international centre for Climate Finance.

The bond, issued by the Republic of Poland, being listed on the Luxembourg Stock Exchange (LuxSE), as well as the announcement of the first Climate Finance Label granted by LuxFLAG to three international funds.

Poland, one of the leading sovereign issuers listed on the Luxembourg Stock Exchange, has chosen LuxSE as the listing venue for the first sovereign green bond in international capital markets. The EUR 750 million green bond will, in parallel, be displayed on the Luxembourg Green Exchange (LGX), launched in September 2016. The LGX, the world’s first platform dedicated exclusively to green securities, provides issuers and investors an environment where they can come together and fulfill their green objectives.

Asked about the selection criteria when choosing the listing venue for the green bond, the Polish Deputy Minister of Finance, Piotr Nowak, explained: “LuxSE is one of the biggest stock exchanges for international bonds in Europe, and a very innovative one. The recent implementation of the Green Exchange is a proof of an open-minded approach towards the needs of financial markets. On top of that, we received strong recommendations from market participants to list there.”

The proceeds of the sovereign green bond will be used for renewable energy, clean transportation, sustainable agriculture operations, afforestation, national parks and reclamation of heaps. Other sovereigns have already publicly indicated that they will join the green bond issuance trend, already well advanced among corporate issuers and development banks.

Moreover, the finance labelling agency LuxFLAG announced this week the first international funds that have been awarded the Climate Finance Label: East Capital China Environmental, Green for Growth Fund Southeast Europe and NSF Climate Change+ Fund.

LuxFLAG launched this new label in September with the aim to set a transparent environment for Climate Finance investments with a view to unlocking capital from institutional and private investors to help finance climate change action. In order to receive the label, funds must dedicate at least 75% of assets under management to investment in climate change mitigation and/or adaptation activities.

As of today, LuxFLAG has issued 58 fund labels: 30 Microfinance, 11 Environment, 14 ESG and 3 Climate Finance. They represent a total of EUR 13.5 billion assets under management.