Exchange of the year – Luxembourg Stock Exchange

Channels: Green Bonds

Companies: LGX, Chinese Interbank Market, SSE

Luxembourg Stock Exchange has won the Environmental Finance's exchange of the year award for the third consecutive year.

It set up the Luxembourg Green Exchange (LGX) in 2016, and claims to be the only dedicated platform for sustainable investment products, and lists almost half of the world's listed green bonds in a single place, it says.

LGX lists products with a total value of €112 billion, including 252 green, social and sustainability bonds, and 25 ESG, green and social funds.

It added 112 listings in 2018, with a combined value of €36.8 billion.

It sets minimum requirements for issuers including that they attain a third-party external review and commit to conduct post-issuance reporting on the way the proceeds are used.

A highlight for LGX in 2018 was the launch of the Chinese domestic Green Bond Channel, a collaboration between Luxembourg Stock Exchange (LuxSE), Shanghai Stock Exchange (SSE) and the Chinese Interbank Market.

It allows Chinese issuers of domestic green bonds on one of these two markets to be displayed on LGX if they provide information in English and commit to ongoing reporting.

The Green Bond Channel has been designed to open up opportunities for investors wanting to finance green projects in China, but lacking basic information and transparency. It also contributes to the internationalisation of Chinese securities, as it encourages issuers to comply with international standards.

The exchange currently lists 18 Chinese domestic green bonds from 12 Chinese corporate issuers, who have to comply with the exchange's post-issuance and impact reporting requirements.

Another highlight of 2018 was the creation of a LGX window for sustainable and responsible investing (SRI) funds. It requires the funds to be labelled green, social or environmental, social and governance (ESG) in order to be displayed, and is limited to certain agencies only, such as LuxFLAG labels from Luxembourg or FNG of Germany.

One judge described LGX as "a great initiative to turn green bonds into a truly global market".

Another said LGX in 2018 had put in an "impressive performance", praising its requirements for quantitative and qualitative supporting documents"