Just two months into the year, the Luxembourg Green Exchange (LGX), a leading platform for sustainable finance operated by the Luxembourg Stock Exchange (LuxSE), has achieved a landmark milestone, showcasing over EUR 1 trillion, approximately USD 1.1 trillion, in outstanding green, social, sustainability, and sustainability-linked (GSSS) bonds listed on its platform.
An Eight-Year Journey to a Trillion Euro Benchmark
The Luxembourg Green Exchange has experienced significant growth since its inception in 2016. Initially established as the world’s premier platform dedicated solely to green bonds, LGX broadened its scope to encompass a comprehensive range of sustainable debt instruments. It has since evolved into a central hub for sustainable finance, offering not just listings but also vital education, data, and support services. This journey to reach EUR 1 trillion in GSSS bonds reflects continuous innovation and expansion within the sustainable finance sector.
However, the Luxembourg Stock Exchange’s involvement in sustainable finance began well before the creation of LGX. In fact, their commitment dates back to 2007 with the listing of the world’s first green bond – the European Investment Bank’s pioneering Climate Awareness bond. Therefore, achieving this EUR 1 trillion milestone is a significant moment of celebration and recognition for LuxSE’s long-standing dedication to making sustainable investments accessible to a global audience.
Driving Tangible Impact Through Sustainable Finance
Since the launch of LGX in 2016, the platform has grown substantially. As of January 31, 2024, LGX hosts over 310 issuers from 60 countries, who have collectively issued more than 1,900 GSSS bonds across 41 different currencies. The diverse community of issuers on LGX includes supranational bodies like the European Union, multilateral development banks, financial institutions, and corporations spanning various industries.
Reaching the EUR 1 trillion mark signifies more than just a milestone for LGX; it represents substantial progress for the sustainable finance industry globally. This achievement underscores the positive impact on communities and individuals whose lives have been improved by projects funded through these green and social bonds. It also recognizes the issuers who are increasingly innovating in sustainable finance to accelerate their transitions towards greener operations and contribute to global sustainable development.
From renewable energy projects brought to fruition by green bonds to advancements in education, healthcare, and affordable housing supported by social bonds, and the use of ambitious Key Performance Indicators (KPIs) in sustainability-linked bonds to foster a more inclusive and sustainable world, the EUR 1 trillion facilitated through the 1,900 sustainable bonds on LGX is actively addressing some of the world’s most critical challenges.
Expanding the Horizons of Sustainable Finance
It took twelve years from the issuance of the world’s first green bond in 2007 to reach a cumulative USD 1 trillion in GSSS issuance worldwide. However, the rate of issuance has since accelerated dramatically, especially in response to the COVID-19 pandemic. In 2021 alone, USD 1 trillion worth of GSSS bonds were issued globally.
The years 2020 and 2021 were also pivotal for LGX as it broadened its focus beyond just being a platform for sustainable securities listings. In 2020, LGX launched the LGX Academy and LGX DataHub, further solidifying its role in the sustainable finance ecosystem.
Since its inception, the LGX Academy has provided sustainable finance education and practical insights to hundreds of participants from Europe, Latin America, Africa, and Asia, guided by expert instructors.
The LGX DataHub has also seen remarkable growth since its launch in September 2020. Initially a structured database for GSSS bonds listed on LGX, it now encompasses structured and detailed sustainability data on over 14,000 GSSS bonds listed globally, representing almost the entire universe of listed sustainable debt instruments. This comprehensive data empowers investors and asset managers to effectively compare the environmental and social impact of various securities and access the necessary information to meet evolving reporting standards.
Globalizing Sustainable Finance and Focusing on Impact
The journey to achieving EUR 1 trillion has also been marked by significant efforts to redirect sustainable capital flows towards regions where they are most needed, particularly in emerging markets and in initiatives promoting gender equality and women’s empowerment.
In 2022, through a Memorandum of Understanding with UN Women, LGX introduced a special gender-focused bond flag on its platform. This feature enables investors to readily identify bonds that allocate proceeds to projects and objectives contributing to gender equality and women’s empowerment.
Facilitating investment in emerging markets has become a key priority for LuxSE through LGX. These regions, often disproportionately affected by climate change, have the greatest need for financing to support their green transitions and achieve sustainable and inclusive development.
To this end, LuxSE has not only offered sustainable finance training and capacity building to market participants in these regions but has also established strategic partnerships with exchanges in Chile, India, Rwanda, Cabo Verde, and the West African regional exchange, among others. These collaborations have facilitated the listing of numerous GSSS bonds on LGX for international investors, including a blue economy bond from Cabo Verde’s iib and the first gender bond from Sub-Saharan Africa issued by Tanzania’s NMB bank.
Transforming Capital Markets for a Sustainable Future
Innovation and rapid market developments have been instrumental in the nearly eight years since LGX was established. However, our core mission remains unchanged: to mobilize investment for sustainable development and drive tangible progress towards the Paris Agreement and the UN Sustainable Development Goals.
As we acknowledge this significant EUR 1 trillion milestone and its implications for capital markets, we extend our gratitude to all issuers who have listed their sustainable debt instruments on LGX and to our international partners for their trust and close collaboration.
We are committed to facilitating the next EUR 1 trillion in GSSS bonds through LGX, driven by our shared dedication to building a more inclusive and sustainable global economy, one bond at a time.
