Luxembourg Launches World’s First Green Stock Exchange 

Luxembourg Green Exchange (LGX)

Today, less than six weeks before COP22 , the Luxembourg Stock Exchange (LuxSE) becomes the first stock exchange globally to introduce a platform for green financial instruments. Luxembourg Green Exchange (LGX) is for issuers who dedicate 100% of the raised funding to green investments. It will restrict access to those issuers who comply with stringent eligibility criteria.

Asked why he is doing this, Robert Scharfe, CEO of LuxSE says: “Why are we doing it ? We think the time is right. New issuance of green securities has taken off since COP21. When we look at the market it is good news that it is growing so fast, but is it growing fast enough? No, it is not. As the International Energy Agency (IEA) has estimated, the world needs $1 trillion a year until 2050 to finance a transition to low emissions.”

We met earlier this month in Singapore at a conference where the momentum building in green finance was evident, and covered here on Forbes as “a quiet revolution.“ Talking to him then, his frustration was palpable at the skepticism often expressed around the subject of green finance becoming mainstream.

Now he says: “Why can’t we go faster? Many issuers are not motivated to do so, they don’t see the advantages and they do see an increased cost of reporting. There is also ‘greenwashing.’ But maybe it is just not good enough to do it the way we have always done it. A dedicated green exchange will raise the bar for disclosure. Because we are raising the bar we are making the market more interesting for issuers because we give them more visibility in dedicated infrastructure.”

LGX will immediately become home to the majority of the 114 green bonds listed at LuxSE, worth over $45 billion. Securities will have to state their nature clearly as ‘green’ or equivalent : ‘climate-aligned’, for example. Disclosure on use of proceeds will have to be compliant with standards laid out by the Climate Bonds Initiative (CBI) and the International Capital Market Association (ICMA), with whom the LGX concept has been developed. The World Wildlife Fund (WWF) has also been involved in its development.

As far back as 2007, LuxSE became the first exchange in the world to list a Green Bond. It was issued by theEuropean Investment Bank (EIB) to finance part of its climate projects.

Source: Forbes

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