3 questions to Chiara Caprioli

Whether you are already part of the LGX Academy or would like to know more about the market, our expert lecturers are bringing you an outlook of the sustainable finance sphere.

In this part, Chiara Caprioli, Senior Business Development Manager at the Luxembourg Stock Exchange, shares her views on teaching and the rise of sustainable finance in emerging markets.

Back in 2016, you were heavily involved in the creation of the Luxembourg Green Exchange (LGX). What made you want to go one step further and become an LGX Academy lecturer?  

LGX has been a journey of innovation from the very beginning. Immediately after launching the platform, we started receiving questions from both the financial sector and the general public. Prospective issuers and advisors wanted to know more about how to bring ESG products to the market with close to no knowledge on the standards, principles, risks and costs, while individuals wanted to learn about the sustainable finance industry and how they could get involved.    

The number of requests our team was receiving revealed a genuine interest in sustainable finance developments and a need for education in this new but rapidly evolving industry. With curiosity often comes misconceptions, and we quickly realized that issuers, investors and intermediaries needed access to expert knowledge to be able to tap into these new opportunities.

While our team was continuously working on growing LGX, we were also present in international working groups, such as within ICMA or at the level of the EU HLEG to play an active role in defining practices and regulatory frameworks. All this showed us the importance of sharing our unique knowledge and industry perspective with other market participants, which ultimately led us to launch the LGX Academy, a new addition to our range of services.

With my involvement in LGX and the edge I could gain working with constituencies that were forerunners in the definition of market principles, I was immediately enthusiastic about being an LGX Academy lecturer. My role at the Academy mainly covers market principles, standards and taxonomies, but I also present case studies and help students come to grips with the pragmatic implementation of such principles, reinforcing the foundational and more academic-oriented overview of sustainable finance and regulatory-focused modules.

Apart from the personal challenge of being a lecturer, the diversity of industries, backgrounds and seniority represented by LGX Academy students is truly rewarding to witness and has positively impacted my role, included my business role. I appreciate the challenge of having to keep contents relevant and interesting for participants. It is the perfect opportunity to keep up to speed in such a fast-paced industry and to have a better grasp of what the market needs!  

Initially planned as in-person sessions, the LGX Academy’s courses were adapted to a virtual setting when the pandemic hit, which allowed us to welcome participants from all over the world, from Luxembourg to Georgia, Brazil, Vietnam, Rwanda and Cabo Verde amongst others.

While green, social, sustainability and sustainability-linked (GSSS) bond issuances continue to grow rapidly worldwide, emerging markets still have a limited access to this industry. According to the OECD, issuance from emerging market issuers represents only 6% of all listed amounts, mainly driven by public institutions and multi-lateral development banks that hope to catalyse additional issuances from private companies.

At the LGX Academy, we witness a strong interest in GSSS bonds from emerging markets, especially from banks and public institutions. Many of our students from these regions are eager to support their institutions in issuing sustainable securities and want to understand how their ESG issuances can be plugged into international standards, or at least leverage existing frameworks, to address local needs without having to reinvent the wheel.

Some participants’ organisations are also actively exploring or creating ad-hoc national frameworks, taxonomies, policy-level incentives and we are proud to be able to help foster such developments, as well as technical assistance programmes in Cabo Verde and Vietnam.

We need to show investors that they can safely invest in labelled products from emerging countries, which is why we focus our efforts on providing detailed guidance on GSSS standards, comparing existing taxonomies and explaining the level of care needed to tap into the sustainable finance market. We believe that filling the education gap will help emerging markets leapfrog their way in the market and potentially reach their sustainability objectives within nationally set deadlines.

Does LGX have specific services for emerging markets?

Amongst the different types of sustainable debt instruments displayed on LGX, sustainability-linked-bond (SLBs) cater particularly well to emerging market issuers with nearly 1/4 of all SLBs issuances originated in an emerging market in 2021*. SLBs allow issuers to commit to reaching predefined sustainability objectives without limiting these issuers to use the proceeds exclusively for sustainable projects. LGX gives SLBs issuers the opportunity to promote their products, strategic targets and progress towards international investors, which is pivotal to connect capital to where suitable investable opportunities are.

As the sustainable debt securities displayed on LGX must be aligned with international standards and have robust levels of disclosure, regardless of the market in which they originate, we have launched the LGX Assistance Services to help issuers navigate the disclosure challenges within the issuance process. Through this customisable service, the LGX team provides assistance in the pre- and post-issuance process, which can be challenging, especially for new or smaller issuers who may lack the expertise or resources to appropriately manage the requirements.

In recent years, the Luxembourg Stock Exchange has also signed several Memoranda of Understanding with stock exchanges from emerging markets, such as Rwanda Stock Exchange India INX and Santiago Stock Exchange, to strengthen cross-border cooperation in sustainable finance and allow its partners to reach international ESG investors interested in financing the transition of emerging markets to more sustainable economies.

Central to the development of LGX’s launch since 2016, Chiara is currently the driving force behind expanding the international recognition and client base of LGX. As an expert in the listing of debt securities, with a focus on green, social and sustainable fixed-income products and ESG disclosure rules, Chiara is actively involved in sustainability committees and working groups throughout the world. She is certified in Primary Markets by ICMA as well as in ESG Investing by UN PRI.