The Luxembourg Stock Exchange, home of the Luxembourg Green Stock Exchange, was voted Stock Exchange of the Year in the Environmental Finance Sustainable Investing Awards 2022. Julie BeckerLuxSE CEO, explains why LGX prioritizes data, diversity and education
Environmental financing: What are the advantages of the Luxembourg Green Exchange platform that sets it apart from the offers of its peers?
Julie Becker: The Luxembourg Green Exchange (LGX) is unique as it is the world’s leading platform for sustainable securities, with more than 1,400 green, social, sustainability and sustainability-linked bonds (GSSS) from 240 issuers in 50 countries, raising a total of €736 billion ($775 billion) for sustainable development.
To ensure transparency, we make all relevant documents available free of charge on our website so that investors can easily verify that issuers are meeting their commitments.
We created LGX in 2016 to enable the Luxembourg Stock Exchange (LuxSE) to facilitate sustainable investments and accelerate funding for the UN
Development Goals (SDGs) and the Paris Agreement. While we initially focused on showcasing a growing range of sustainable titles on the platform, we have since broadened the scope to also address the key hurdles facing sustainable finance today, namely the need for education and structured data on sustainability.
EF: Tell me about LGX’s new fund window – what has changed and why?
J.B.: The adoption of the EU Sustainable Financial Disclosure Regulation (SFDR) – along with other market developments – has driven this overhaul. Ensuring greater transparency has always been core to LGX’s mission, so we’ve decided to change the structure of our fund window to reflect two categories of funds on LGX – one for ESG funds, which includes SFDR funds Article 8, and one for impact funds, which includes funds under Article 9 of the SFDR.
All funds listed on LuxSE and classified under SFDR Article 8 or Article 9 by the asset manager are now displayed on LGX, and this new structure provides investors with more transparency on the SFDR classification of funds.
EF: Sustainable investors often say that access to reliable and comprehensive data is essential. How does LGX solve this?
J.B.: Investors need access to structured, comprehensive and meaningful sustainability data to make informed and sustainable investment decisions. To address this data challenge, we created the LGX DataHub in September 2020.
A single source of data in the sustainable finance market, the LGX DataHub is a centralized database for structured and granular data points on over 7,000 GSSS bonds – covering nearly the entire universe of listed sustainable bonds in the world.
Using the LGX DataHub, asset managers and investors can explore multiple data points on each bond and compare the social and environmental impact of different securities. This will help them develop sustainable investment strategies and be accountable for their investments.
We are constantly developing the LGX DataHub to enhance the user experience with new data categories and filters, and strive to achieve full coverage as soon as possible.
EF: You recently adapted the platform to improve the visibility of gender links – what has changed and why is it important?
JB: Gender inequality is still a reality in most parts of the world and to help address this we need to better link gender and finance. To contribute to these efforts, LuxSE signed a Memorandum of Understanding with UN Women in May whereby we committed to use our expertise to advance funding for gender equality and women’s empowerment.
As a first step, we decided to flag gender-specific bonds on LGX to make it easier for investors to identify sustainable bonds that help empower women. Gender-focused bonds are social, sustainable or sustainability-linked bonds that allocate some or all of their funding to projects and strategies that contribute to gender equality goals.
We believe gender-responsive investing is a megatrend that will grow in prominence as investors become more specific when it comes to the type of social impact they want to support.
EF: LGX launched its Academy in 2020 – what has been achieved so far?
JB: Since launching LGX Academy two years ago, our courses have grown in scope and reach. Our training courses cover the fundamentals of sustainable finance, products, labels and standards, regulations and good market practices.
In 2021 alone, our expert speakers delivered nearly 140 hours of training to groups of participants from banks, financial firms, law firms, issuers and professional services firms from countries such as the Luxembourg, Malta, Switzerland, Australia, Vietnam, Cabo Verde and Rwanda.
While our speakers deliver training to attendees around the world, our focus this year is on emerging markets. These are the countries likely to suffer the most from climate change, so educational programmes, knowledge sharing and capacity building will be essential. With the LGX Academy, LuxSE is well placed to provide this support.