Luxembourg introduces first green exchange

The Luxembourg Stock Exchange (LuxSE) has announced the launch of a platform for green financial instruments, the Luxembourg Green Exchange (LGX).

The majority of the 114 green bonds listed on LuxSE will be listed on the LGX as from today, weighing over $45bn (€40bn). The LSE specified the access is limited to issuers complying with stringent eligibility criteria.

That includes :

  • Self-labelling as green or equivalent (e.g. climate-aligned). The issuer has to clearly state, during the application process, the intended green nature of the security.
  • Use of proceeds. Need of a clear disclosure that the proceeds are exclusively used for financing or refinancing projects that are 100% green, according to the GBP or CBI eligibility taxonomy.
  • Ex-ante review and ex-post reporting. Issuer’s commitment to provide both independent external review and ex-post reporting.

Among securities banned from LGX remain the following : nuclear power production; trade in CITES; animal testing for cosmetics and other non-medical products; medical testing on endangered species; fossil fuels.

Commenting on the launch of LGX, Robert Scharfe, CEO of LuxSE, said: “New issuance of green securities has taken off since COP21. There is a real desire for change. The green market has enormous potential but this needs to be matched by interest from investors.

“By setting strict standards for green securities, LGX aims to create an environment where the market can prosper. The upcoming COP22 event will focus on preparations for the Paris Agreement to enter into force. With LGX, a dedicated platform for both issuers and investors, we are granting the solution for financing green projects.”

2015 has been a record year for labelled green bonds with $42bn (€37.3bn) in new issuances globally.

The green bonds issuance is to reach $100bn (€88.9bn) in 2016 as estimated by the Climate Bonds Initiative.

Scharfe said LuxSE aims to become the main centre for sustainable finance in Europe.

He added: “As the leading exchange for green bonds, LuxSE can play a vital role in shaping the future of green finance. In fact, we regard the development of this market as our duty. Users of international capital markets look to us to provide the best generally available information to investors.

“With respect to the green bond market, we are committing the same efforts to promote improved visibility by providing greater transparency and more trust.”

Adrien Paredes-Vanheule
Adrien Paredes-Vanheule is deputy editor and French-Speaking Europe Correspondent for InvestmentEurope, covering France, Belgium, Geneva and Monaco. Prior to joining InvestmentEurope, he spent almost five years writing for various publications in Monaco, primarily as a criminal and financial court reporter. Before that, he worked for newspapers and radio stations in France, in particular in Lyon.

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