Leveraging Private Sector Investment

A coherent and integrated strategy to align climate finance in quantity and quality, ...

 

 

... in a public private, multistakeholder and pluridisciplinary approach

As of April 2015, a Climate Finance Task Force started its work in a multistakeholder, public-private format, in order to explore the most promising strands to incentivize the private sector to invest in climate action and to advice the government accordingly. The strategy presents six operational vectors:

 

1.    Consolidation

In 2016, building on its traditional activities, the Luxembourg Stock Exchange launched the Luxembourg Green Exchange, as the first platform worldwide to list exclusively 100 per cent green bonds of an overall value of 50 billion euros. (https://www.bourse.lu/green)

 

2.    Strategic partnerships

Luxembourg – EIB Climate Finance Platform

The Luxembourg government contributes 30 million euros, as first loss guaranty to mitigate private sector investors’ risk, to be co-invested with the EIB in investment funds dedicated to finance climate change mitigation and adaptation, including in developing countries. (http://www.eib.org/infocentre/press/releases/all/2016/2016-249-luxembourg-and-the-eib-pioneering-in-the-field-of-innovative-climate-finance-to-support-high-impact-climate-action-projects.htm)

 

IFC – Green Cornerstone Fund

As a strategic partner of the International Finance Corporation (IFC), the Luxembourg government contributes to a technical support facility of the Green Cornerstone Bond Fund, an Luxembourg based investment fund, targeting green bonds emitted by banks in developing countries.

 

3.    Quality control

In September 2016, the labeling agency LuxFLAG launched a Climate Finance quality label to acknowledge the effective climate focus of investment funds in the implementation of their investment policy. So far, the label has been granted to four investment funds. (https://www.luxflag.org/labels/climate-finance/)

In the same spirit, LuxFLAG recently launched a Green Bond label. (https://www.luxflag.org/labels/green-bond/&sid=69fcf69a69408d482ad56c90e42d7147)

 

4.    Innovation

In a public private partnership approach, the Luxembourg government and partners from the private sector are setting up a Climate Finance Accelerator for innovative investment fund managers who are specialized in climate action and intend to launch their activities out of Luxembourg and benefit from financial and non-financial incentives.

 

5.    Legal and regulatory environment

The members of the Climate Finance Task Force – with the Ministry of Finance in the lead – are checking the conformity of the operational vectors of the Luxembourg Climate Finance Strategy with existing national and European legislation and regulation, as well as with future rules in the making.

 

6.    Promotion and communication

Luxembourg for Finance, the agency for the Development of the Financial Centre, is promoting the different operational vectors of the Luxembourg Climate Finance Strategy , with a special focus on their mutually beneficial effects. (http://www.luxembourgforfinance.com/sites/luxembourgforfinance/files/climate_finance_december_2016.pdf)