LONDON, Sept 27 (Reuters) - The Luxembourg Stock Exchange launched a platform for green bonds on Tuesday, called Luxembourg Green Exchange (LGX), to set a new benchmark for the growing market.
Green bonds are used to help finance projects such as renewable energy and low-carbon transport. Issuance could reach $75 billion this year, according to estimates by Moody’s Investor Service.
The exchange said it is the first stock exchange globally to introduce a platform for green financial instruments.
LGX will become the platform for most of the 114 green bonds listed on the Luxembourg Stock Exchange, which are worth over $45 billion. The exchange said it also aims to become the main centre for sustainable finance in Europe.
“The green market has enormous potential but this needs to be matched by interest from investors. By setting strict standards for green securities, LGX aims to create an environment where the market can prosper,” Robert Scharfe, chief executive of the Luxembourg Stock Exchange said in a statement.
Access to LGX will be limited to issuers who can clearly show the environmental benefit of the bond; show that the proceeds will be used for financing or refinancing projects which are fully environmentally friendly and provide both an independent external review of the bond and reporting after the bond is issued.
Access to LGX will be banned for securities related to nuclear power production; animal testing for cosmetics and other non-medical products; medical testing on endangered species and fossil fuels, the exchange said. (Reporting by Nina Chestney; Editing by Alexandra Hudson)