Luxembourg Becomes First European Country to Launch Sustainability Bond Framework
The Luxembourg Ministry of Finance announced that the country has launched a ne sustainability bond framework, becoming the first European country to do so. The new framework is also the world’s first to fully comply with the new recommendations of the European taxonomy for green financing.
Pierre Gramegna, Minister of Finance, said:
“I welcome the launch of this new Sustainability Bond Framework, which is at the forefront of innovation in financing, and will enable the country to consolidate its position as a centre of excellence in the field of responsible, sustainable and innovative finance. The framework paves the way for greener, more social and therefore more sustainable financing, and thus is fully in line with Luxembourg’s commitments to sustainable development and its ambitious public investment policy. Through this framework, the country is well positioned to meet the challenges of a dynamic economic development, which takes into account environmental issues and social equity.”
The new framework has received a second party opinion from Sustainalytics, stating that it aligns with the Sustainability Bond Guidelines 2018, and the four core components of the ICMA Green Bond Principles (the “GBP”) and the ICMA Social Bond Principles (the “SBP”). The Ministry stated that the new framework has also been designed to comply with the draft European Green Bonds Standard (EU GBS).
The launch of the new framework will enable the Luxembourg government to issue green, social or sustainability bonds (which combine green and social aspects). Proceeds from the bonds issued through this framework can only be used to finance or refinance eligible green and social expenditure in the following categories: construction of green buildings, energy transition, development of low-carbon transport, environmental protection, water and wastewater management, climate financing and R&D, access to essential services – health, education and social inclusion, affordable housing and job creation.
The government stated that the introduction of the framework aligns with its efforts in the field of sustainable finance over the last several years, 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. It is also aimed at contributing to the positive development of the sustainable bond market and accompanying the maturing of this market on a global scale.