Exchange in Focus: LGX expands to welcome Climate-Aligned Issuers

Exchange in Focus: LGX expands to welcome Climate-Aligned Issuers

4 March 2021

Luxembourg Stock Exchange (LuxSE) announced the latest development of the Luxembourg Green Exchange (LGX): a brand-new section of LGX dedicated to ClimateAligned Issuers (CAI), built on Climate Bonds Initiative (CBI) issuer screening and research. LGX is now adding to its labelled bonds section a new section dedicated to issuers of debt securities that are active in climate aligned sectors such as clean energy, low-carbon transport and sustainable land use, but that may not have issued bonds in the labelled format.

Unlocking climate finance

Climate Bonds-LGX Climate-Aligned Issuers aims to shine a light on the wider climate-aligned investable universe by highlighting private and public companies that derive at least 75% (strongly aligned issuers) or at least 95% (fully aligned issuers) of their revenues from low-carbon activities. Given the strong environmental dimension of their line of business, all debt securities issued by CAIs will be displayed as climate-aligned investments opportunities. “Today’s launch aims to cater to investors’ demand for climate-aligned investment opportunities and contributes to a low-carbon and more inclusive economy. While the bonds issued by CAIs may not necessarily be labelled as green, they finance low-carbon activities with a positive environmental impact. With this new section, investors can identify untapped opportunities in climate finance and support companies with climate-aligned business activities. In the transition decade that has just started, LGX is keen on encouraging a broader pool of strong investment opportunities to ESG-conscious investors,” commented Julie Becker, Deputy CEO of LuxSE and Founder of LGX.  

More diversity

With this move, LuxSE complements its already extensive products section offering of labelled green, social, sustainability and sustainability-linked bonds on LGX, with a new issuers section aimed at supporting the sustainable finance agenda by giving visibility to environmentally friendly issuers of debt securities. Defined and monitored by the Climate Bonds Initiative, CAIs are identified based on the percentage of their revenue streams derived from climate-aligned activities as per the Climate Bonds Taxonomy. CAI securities listed on LuxSE will be displayed on the dedicated LGX section. On the day of the launch, the Climate Bonds-LGX Climate-Aligned Issuers section included 23 CAIs in 16 different countries. Other CAIs are expected to join LuxSE and LGX in the coming months.  

Careful screening by Climate Bonds Initiative

Issuers included in the Climate Bonds-LGX Climate-Aligned Issuers section are identified by the CBI through an in-depth screening process, research and a detailed analysis of revenue streams, business activities and outstanding debt. Climate Bonds has provided research on CAIs since 2012, and the methodology has evolved over time. Currently, CBI defines eight climate-themes: renewable energy, low-carbon transport, smart buildings, water, waste, sustainable land use & agriculture, climate adaptation and ICT. “This launch by LGX represents 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 CAIs section opens new opportunities for finance to flow where it’s needed most,” commented Sean Kidney, CEO of the Climate Bonds Initiative.

SSE Climate Disclosure Advisory Group

The SSE Climate Disclosure Advisory Group aims to support exchanges by providing guidance to their market on climate disclosure. The new workstream will assist stock exchanges in developing best practice reporting guidance for issuers to ensure globally consistent disclosures incorporating the recommendations from the FSB Task Force on Climate-Related Financial Disclosures (TCFD). This new project is being conducted under the auspices of Mark Carney, UN Special Envoy for Climate Action and Finance, in collaboration with our Co-Chairs for this Advisory Group, London Stock Exchange Group (LSEG) and Johannesburg Stock Exchange. More information here and here.

About the SSE

​The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. The SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals. The SSE seeks to achieve this mission through an integrated programme of conducting evidence-based policy analysis, facilitating a network and forum for multi-stakeholder consensus-building, and providing technical assistance and advisory services.