Luxembourg: first country in the world to introduce a law on green covered bonds

ABBL Published 19.01.2018
On 5 January 2018, the Luxembourg State Council (“Conseil d’Etat”) endorsed the draft bill on banks issuing covered bonds (banques d’émission de lettres de gage) amending the law of 5 April 1993 on the financial sector.

As a result, Luxembourg will be, once the bill voted in Parliament, the first country in the world to introduce a new category of green covered bonds (renewable infrastructure covered bond or “lettres de gage énergies renouvelables”).

The law intends to:
  • Create a legal framework with clear criteria and standards that will increase the confidence of potential investors in related products;
  • Boost financing of environmental and climate protection projects (including renewable energy, waste, water treatment or e-mobility projects);
  • Revitalize the Luxembourg Covered Bond market.

The Ministry of finance, Pierre Gramegna said: “the law will further strengthen Luxembourg’s position as a center of competence in the field of green finance”.

 By Fabio Mandorino, Adviser Private Banking, Commercial Banking and Sustainable Finance at the ABBL