The Luxembourg Green Exchange (LGX) is the world’s leading platform for green, social and sustainable securities. The Luxembourg Stock Exchange (LuxSE) created LGX in 2016 as a direct contribution to the global climate goals defined in the Paris Climate Agreement and the UN SDGs. Securities listed on LuxSE that comply with mandatory LGX transparency requirements, which are based on international sustainable finance standards, can be considered for display on LGX.
Having celebrated the fourth anniversary of the official launch of the platform in September 2020, LuxSE and its LGX team are constantly working to grow LGX as the world's leading platform for green, social and sustainable securities, facilitate sustainable investment and contribute to accelerating the green transition.
Key facts
- LGX was created in 2016 as the world's first platform fully dedicated to green bonds, and has since expanded to include social and sustainability bonds as well as SRI funds.
- As the world’s leading platform for sustainable securities, LGX has an international footprint with 135 issuers from 32 countries, issuing securities in a total of 32 currencies.
- As of 31 August 2020, LGX displays 796 green, social and sustainable securities totalling USD 356 billion.
The challenge
The International Energy Agency has estimated that the world needs USD 1 trillion a year until 2050 to finance a transition to low emissions. Public funding alone will not suffice, and private capital needs to be mobilised to reach the objectives defined in the Paris Climate Agreement and the UN SDGs. LuxSE is actively working to play its part in addressing climate change by facilitating sustainable investment and contributing to reorient capital flows towards green and sustainable development.
The solution
The Luxembourg Green Exchange is the world’s first platform dedicated entirely to sustainable securities. Its overriding objective is to unlock sustainable capital and to help redirect capital flows towards sustainable investment projects.
LGX promotes the sustainable finance agenda. It provides visibility to issuers who raise funding for green and sustainable investment projects, thereby supporting sustainable development and the green transition. Issuers wishing to display their financial security on LGX first need to comply with the platform’s stringent eligibility criteria and then commit to ongoing reporting on their investments. All the related documents and reports are made readily available on the LGX website and make it easy for investors to verify whether the issuers deliver on their commitments.
Helping the planet
Through LGX, LuxSE plays a key international role in bringing sustainable securities – which raise financing for responsible investment – to the market by acting as the platform on which issuers can provide investment opportunities to the public.
For example, over a two-year period, the LGX team and the World Bank worked closely together to conduct a detailed analysis of all World Bank bonds listed on LuxSE. In June 2019, this review process resulted in a selection of 174 World Bank bonds, worth a total of EUR 40 billion, and fully compliant with the transparency requirements and reporting criteria defined for financial securities displayed on LGX.
Projects financed through these securities include those in areas such as climate change mitigation, adaptation and climate smart agriculture.
Helping people
Many financial institutions and investors would like to contribute to sustainable development, but lack the necessary market knowledge. Over the past years, the LGX team has frequently been asked to share its knowledge and experience in the field of sustainable finance. One of the missions of an exchange is to ensure investor protection and this starts with raising awareness and education. In May 2020, the Luxembourg Stock Exchange established the LGX Academy to strengthen sustainable finance knowledge in Luxembourg and beyond. The LGX Academy offers tailor-made lectures to participants of all levels on a broad range of topics linked to sustainable finance, such as its foundations, products &standards, applicable regulations and current market practice, thereby allowing participants to start their sustainable finance journey.
In September 2020, LuxSE established the LGX DataHub, a centralised data hub for sustainability data on green, social and sustainability bonds. The LGX DataHub responds to the data challenge by turning unstructured data into structured data, made possible by years of in-depth expertise on documentation linked to bond issuance at LuxSE.
As well as creating concrete resources for stakeholders, through the securities displayed on LGX, numerous global beneficiaries receive much needed funding for crucial climate related projects. In addition, in 2019, LuxSE took an equity participation in the fintech StarTalers – Women’s Best Financial Friend, promoting sustainable investments for women through digital and computer assisted investment advisory solutions.
Spillover effect
LuxSE established partnership agreements with important institutions in Africa, Asia and South America to promote the sustainable finance agenda and strengthen cross-border collaborations in support of sustainable development. These agreements included MoUs with the Nigerian Stock Exchange and the Santiago Exchange, and the active support of the Inter-American Development Bank’s Green Bond Transparency Platform, a core initiative for the LatAm markets.
Continuing its mission to enhance transparency and the access to information in international capital markets, LuxSE extended its Green Bond Channel for Chinese domestic green bonds to include bonds listed on the Shenzhen Stock Exchange in 2019. The Green Bond Channel, which was created in partnership with the Shanghai Stock Exchange in 2018, allows for information on Chinese domestic bonds to be displayed in English at LuxSE.
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