The Luxembourg Green Exchange (LGX) has recently launched a new section dedicated to climate-aligned issuers (CAIs) regardless of whether they are labelled as such or not. To facilitate the operation of this section, LGX has partnered with the Climate Bonds Initiative (CBI) which is responsible for searching, selecting, and monitoring CAIs listed on the platform.
The new section is dedicated to public and private issuers of debt securities involved in sectors such as renewable energy, low-carbon transport, smart buildings, water, waste, sustainable land use and agriculture, climate adaptation, and ICT.
Eligible CAIs are identified based on the percentage of the revenue they derive from climate-aligned activities. Those deriving at least 75% of their revenue from these activities are regarded as strongly aligned and those deriving 95% are viewed as being fully aligned.
When launched, the CAI section included 23 bond issuers from 16 countries, 17 of which were labelled as fully aligned including the Spanish waste management company, Aigues de Barcelona Finance, the French railway transport company, Raiseau, the Belgian public waste management, and water treatment company and the French telecom giant, Orange.
Sean Kidney, the CEO of the Climate Bonds Initiative, welcomed the launch of the CAI section as “a positive step in market development, connecting investors and capital with companies that already have inherent low carbon business models”.
“In an environment where climate and sustainability factors are becoming fundamental to investment decisions, the CAI section opens new opportunities for finance to flow where it’s needed most,” Kidney added.
For her part, LGX founder, Julie Becker, emphasized, “With this new section, investors can identify untapped opportunities in climate finance and support companies with climate-aligned business activities. While the bonds issued by climate-aligned issuers may not necessarily be labelled as green, they finance low-carbon activities with a positive environmental impact.”
Launched in 2016, LGX is a platform for sustainable securities and issuers contributing to financing a low-carbon and more inclusive economy. This is the stock exchange platform dedicated entirely to investments intended to fight global warming. In 2020, LGX was awarded the UN Global Climate Action Award for its leadership in tackling climate change.
Climate Bonds is a non-governmental organization (NGO) whose goal is to raise the money needed to save the climate by developing a large and liquid climate bond market that will help to lower the cost of capital for climate projects and improve access to lower-cost debt in emerging markets.
Climate change has been a “hot” topic for many years. Goal 13 of the UN’s Sustainable Development Goals calls for urgent action to combat climate change and its impacts. This has become a global priority and finance needs to be part of the solution. According to Robert Scharfe, CEO of Luxembourg Stock Exchange, “green bonds are still only 1% of the total debt market, and in the fund industry sustainable products account for over 12% of assets under management.”
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