The history of LGX: Diving back to 5 years of growth
In this special series of articles, we look back at each year of milestones of the Luxembourg Green Exchange (LGX) from its creation in 2016 to its 5th anniversary celebration in September 2021.
2016 was just the beginning of a long and successful journey for LGX. Less than a year after its creation, the platform was already expanding its coverage with windows dedicated to social and sustainability bonds as a direct response to the market’s broadening interest beyond green bonds.
Agility was indeed required to embrace a broader sustainable investment perspective driven by market demand and to cater for issuers that intended to bring to market either social projects or a mix of green and social projects via the newly codified “social” and “sustainability” bonds. As for green bonds, visibility and transparency remained the backbone of our offering, aiming to facilitate informed investment decisions and to build trust in the positive externalities of such products.
It did not take long until the contribution of LGX to a market in the making started to garner international recognition. 2017 marked the first of numerous awards recognising the unprecedented role played by our exchange in the development of sustainable finance.
For the first time, LGX was awarded with the title of Exchange of the Year by Environmental Finance at its Green Bond Awards 2017 for its role in supporting the growth of the green bond market through "innovative thinking, speed of delivery, quality assurances and transparency".
In the same year LGX was recognised by Luxembourg Finance Awards for its “Outstanding Contribution to the Financial Center of Luxembourg”, highlighting its innovative efforts in boosting green, social and sustainable finance internationally.
There is no doubt that the emergence of sustainable finance has offered stock exchanges a unique opportunity to play a more prominent role than ever before and to strengthen the link between finance and the real economy. LGX has always been proud to be able to portray its capital market infrastructure role, namely around transparency and liquidity, to help lay down solid foundations for a market with a huge potential and strong political backing.
From the creation of LGX onward, we understood how important global cooperation is to structure truly integrated and efficient capital markets capable of serving the ambitious goals set by the UN SDGs and the Paris Agreement . We therefore started to join several global constituencies such as ICMA’s Green Bond Principles and the UN Sustainable Stock Exchanges Initiative – just to mention a couple - as the role of exchanges became critical in cementing standards convergence and trust.
With this important point in mind, we also partnered with the International Institute of Green Finance to launch the CUFE-CNI Green Bond Index Series, the first Chinese Green Bond indices to display simultaneously in China and Europe. This new series acted as a market benchmark and investment tool for Chinese green bonds.
Later that year, we joined forces with the Shanghai Stock Exchange (SSE). From this agreement came an index series tracking Chinese domestic Renminbi-denominated green bond listed in SSE and financing environmentally friendly projects. This was a huge achievement that enabled LGX to increase visibility and transparency of Chinese green securities for international investors.
Little did we know at the time that these were just the first steps in our strenuous global cooperation efforts with other capital market players from all four corners of the world.