Fixed income

LuxFLAG Adds Green Bond Label

Stockholm (NordSIP) – LuxFLAG, the Luxembourg Finance Labelling Agency, has added a Green Bond label with funds investing in green bonds (instruments employed to finance green projects). The suit of labels offered by LuxFLAG is thereby constituted of: Green Bond, Microfinance, ESG and Climate Finance.

“The Green Bond market is evolving rapidly and requires high transparency and evidence that proceeds are used for green projects only,” said Luxembourg Minister of Finance Pierre Gramegna. “In line with its other green initiatives, the Luxembourg Government endorses the creation of the LuxFLAG Green Bond Label, a transparent high-standard certification that allows investors to be sure about their investments in green products.”

Funds are required to apply for the label, subject to a vetting procedure similar to that applied to LuxFLAG’s other labels, whereby a committee of experts will review applicants to determine whether they meet the labelling criteria.

The criteria for inclusion on the list of labelled Green Bond funds includes:

  • To follow internationally recognized guidelines/standards, such as the Green Bond Principles, in order to illustrate commitment to transparency and disclosure;
  • To report on qualitative performance indicators and, where feasible, quantitative performance measures with the key underlying methodology and/or assumptions used in the quantitative determination;
  • To apply Sustainable Development Goals in the use of proceeds and provide evidence than an exclusion policy is applied across 100% of its use of proceeds;
  • To be subject to regulatory requirements applicable in the EU Member States or equivalent, and to be issued on a regulated or regulated equivalent recognised stock exchange;
  • To provide ex-ante review and commit to regular ex-post reporting (every 24 months).

Members of the review committee include:

  • Rodolphe Bocquet, CEO and co-founder of Beyond Ratings, a research provider offering services in integrating climate and energy issues in sovereign risk assessment;
  • Giuseppe Corsinin, Director of Capital Markets and Accounting Advisory Services at PwC Luxembourg;
  • Vincent Linari-Pierron, Managing Partner at Linari Law Firm;
  • Tom Pfeiffer, Partner at Deloitte, with over 20 years of experience in audit and advisory in the financial, commercial, industrial and public sectors.

“The Luxembourg government remains strongly committed to international climate finance action and the Paris Agreement,” said Carole Dieschbourg, Luxembourg Minister for the Environment. “With a contribution of €120m from 2014 to 2020, corresponding to €215/inhabitant, Luxembourg is one of the biggest donors in relative terms. This amounts to an annual contribution of €5m to the Green Climate Fund which translates into €10/inhabitant per annum summing up to €35m in total. LuxFLAG’s Green Bond label plays an instrumental role in helping to set strong market standards to bolster green finance flows.”

LuxFLAG will review incoming applications on a “first come, first served basis,” with label award decisions made quarterly.



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