Luxembourg is the first European country and first AAA rated country worldwide to launch its new sustainability bond framework, on September 2, 2020. This framework meets the International Capital Markets Association (ICMA) Green, Social and Sustainability Bonds principles, the standard in the field. Living up to its reputation as a first-mover, Luxembourg has also incorporated eligibility criteria that are already fully in line with the recommendations of the final report of the Technical Expert Group (TEG) on the Taxonomy of the European Union. In the same spirit, the framework has been designed to comply with the draft European Green Bonds Standard (EU GBS).
The launch of the framework, which will enable the issuance of green, social or sustainability bonds (i.e. combining green and social aspects), is in line with the efforts undertaken by the Luxembourg Government over the last years in the field of sustainable finance, and underlines the innovative and proactive role of the country and its financial centre, which is already today an international leader in the area of sustainable investments. Anticipating current market trends and investor demand that are increasingly oriented towards sustainable investments, the framework will enable the country to be ready for the financial world of tomorrow. In particular, it will contribute to the positive development of the sustainability bond market and accompany the maturing of this market on a global scale.
Based on this new framework, Luxembourg was the first European country, and first AAA country in the world, to launch a sustainability bond, on 7 September 2020. With a volume of €1.5 billion and a 12-year maturity, the bond bears a negative interest rate of -0.123%. The fact that the demand for this bond quickly exceeded the initial offer underlined both the interest that investors have in this new type of product and the confidence that the markets place in the Luxembourg economy. The bond is listed on the Luxembourg Stock Exchange (www.bourse.lu), the world's leading platform for green and sustainable bonds.
On 6 September 2021, the Luxembourg State Treasury published the first bond report, as foreseen by the Sustainability Bond Framework.
The report contains both the allocation as well as the impact report for the years 2018 to 2020.
The sustainability bond finances or refinances investments worth 1.5 billion euros until 2022, covering at least 65 projects in seven different sectors providing positive environmental and social outcomes. .
This first sustainability bond report provides details on the allocation of the 770 million euros already invested between 2018 and 2020 as well as the expected impacts of the investments. Proceeds have been allocated in line with the Sustainability Bond Framework, which complies with the ICMA Sustainability Bond guidelines, the 2020 draft EU Green Bond Standards where relevant and feasible, as well as the recommendation of the Technical Expert Group final report on the EU Taxonomy, on a best effort basis. The alignment of the Framework and the allocation report has been independently assessed by Sustainalytics, a leading ESG ratings, research and analytics firm.
Learn more about Luxembourg’s role as a leading hub for sustainable finance: