The ministry of finance has unveiled the third and final report of its first sustainable sovereign bond, in a on Thursday 7 September 2023. The bond was initially issued on 7 September 2020 and was the first of its kind for the country. The report, published on the state treasury’s , provides an in-depth look at the allocation and impact of the bond’s proceeds, primarily targeted at international institutional investors.
Pioneering investments across sectors
The bond, valued at €1.5bn, has financed or refinanced a diverse portfolio of 74 projects across seven different sectors, driving positive environmental and social impacts, stated the report.
These sectors include green initiatives such as the development of tram lines projected to serve up to 31m users per year by 2030 and wastewater treatment facilities designed for a maximum capacity of 887,000 population equivalents per year. Furthermore, the water retention capacity of the Pétrusse river will be increased by 859 cubic-metres following its rehabilitation works.
Focus on social impact
The bond also emphasised social well-being, contributing to the construction of 1,478 units of affordable housing for approximately 3,400 eligible beneficiaries.
According to the ministry, the projects boosted the hosting capacities of educational institutions for around 6,900 students and pupils, and increased the total patient capacity for hospitals by more than 25,000. Additionally, 15 social inclusion projects have benefited from these investments.
The report also details the allocation of €366m invested during the 2022 fiscal year.
Marking the end of an era
This third report marks the end of the annual publication of allocation and impact reports. According to the framework set forth in 2020, Luxembourg has successfully achieved its goal of allocating the entire bond amount within two fiscal years following its issuance, concluded the report.
Expenses related to projects carried out between 2018 and 2022 have also been included in the allocation.
Independent evaluation
The alignment of the allocation and impact report was independently reviewed by Sustainalytics, a leading firm in the field of ESG rating, research and analysis, reaffirming Luxembourg's commitment to transparency and sustainability.
(DP), minister of finance, stated, “Luxembourg was the first European country as well as the first AAA-rated country in the world to issue a sustainable sovereign bond. I am delighted with the complete allocation of the proceeds from the bond to environmental and social projects, which underlines that the grand duchy of Luxembourg is playing its role in contributing to a transition towards more sustainable investment policy, while ensuring the highest possible level of transparency since all of these reports detail project by project the main impact indicators.”