Luxembourg plays a pioneering role in sustainable finance, mainly through initiatives such as the Luxembourg Green Exchange (LGX). The LGX is a platform of the Luxembourg Stock Exchange which is dedicated to green bond issuance and capacity building to foster the establishment of capital markets in partner countries, while supporting broader social and sustainability objectives. These efforts are embedded in a dedicated strategy for inclusive and innovative finance, which focuses on building strategic partnerships and leveraging new financial instruments as a means to strengthening commitment to sustainable development.
Partnerships in sustainable finance: Luxembourg’s Green Exchange
Abstract
Many of Luxembourg's priority partner countries are low-income countries with weak capital markets and generally developing financial systems. This means that only the largest companies can raise financing for their operations, as domestic bond and equity markets are often not large or active enough to offer much liquidity. Luxembourg's government and private sector have developed internationally recognised expertise in green and sustainable finance and are now working to align this with the specific needs of partner countries.
Luxembourg has long been a leader in the field of sustainable finance, continually striving to partner with countries in this field, as illustrated in its strategy for inclusive and innovative finance. The Ministry of Foreign Affairs, in collaboration with the Luxembourg Green Exchange (LGX), has taken significant steps to address the challenges of sustainable finance in underdeveloped capital markets. LGX, launched in 2016, has become a major player in the sustainable bond market. Partnerships with multilateral actors and Luxembourg’s development co-operation have made it possible to support projects that are crucial for financing social and sustainable objectives, while providing access to international financial markets. These efforts are complemented by capacity-building programmes, including tailor-made or regular courses, which are delivered through the LGX Academy.
In addition, Luxembourg has fostered international collaborations with key multilateral institutions such as the International Finance Corporation (IFC), UN Women and the United Nations Development Programme (UNDP) and the Global Green Growth Institute (GGGI). These collaborations provide further support for the financial and technical capacity of partner countries, including specialised training and workshops, which help local authorities to navigate the international financial markets and issue sustainable financial instruments autonomously.
Leadership in sustainable finance with global impact: The Luxembourg Stock Exchange's efforts have led to the issuance of numerous green, social and sustainability bonds, channelling funds into sustainable projects worldwide. In 2024, 42% of global sustainable bonds were listed on its LGX platform. This includes the first Cabo Verdean blue bond, issued in November 2023, which is listed locally in Cabo Verde and also “double listed” on the Luxembourg Stock Exchange via the LGX platform. This bond aims to promote the sustainable management of oceans and marine resources, and while it cannot be traded on LGX for the time being, the “double listing” gives the bond greater visibility and helps boost the confidence of international investors. In addition, LGX also facilitated the “double listing” of the gender focused Pro Mujer bond, introduced in March 2024, and aimed at empowering women in Latin America. Furthermore, ongoing efforts to establish a green exchange in Kigali’s Stock Exchange in Rwanda illustrates the growing commitment to sustainable finance in East Africa. In 2024, the LGX platform lists over 2 100 green bonds from 60 countries, encouraging other financial markets to adopt similar platforms.
Greater transparency and investor confidence in new products and markets: Luxembourg has also helped to develop a more transparent market for sustainable finance, including in emerging areas such as biodiversity and sustainable land use, encouraging investor confidence and participation. For example, the Cabo Verde Blue Bond (although not yet fully tradable on international platforms) has served as a catalyst to raise government awareness and commitment to sustainable finance.
The importance of developing secondary markets. The absence of these markets (where investors purchase securities or assets from other investors rather than from issuing companies) in partner countries can limit the potential attractiveness of listed bonds. Fostering robust financial markets and improving creditworthiness are therefore essential to support sustainable investment in these regions.
The fundamental role of local capacity. A lack of technical capacity or expertise in partner countries can limit the interest of global investors in sustainable financial instruments. The success of sustainable finance initiatives depends not only on the issuance of bonds, but also on the capacity of local institutions to understand and manage these instruments.
The alignment of Luxembourg's expertise with local needs. Luxembourg's expertise in green and digital finance does not always align with the local market needs of partner countries. Luxembourg should systematically focus on understanding and addressing these specific needs, particularly in developing financial markets.
The value of public-private partnerships. Collaboration between the government and the private sector is critical for scaling sustainable finance initiatives in partner countries.
Luxembourg Stock Exchange (2024), Pro Mujer: Transforming Women's Lives in LatAm, https://www.luxse.com/blog/Sustainable-Finance/pro-mujer.
Luxembourg Stock Exchange (2023), First Cabo Verdean Green Bond listed on LuxSE, https://www.luxse.com/about-us/press-centre/53c7a470-e652-4e30-8929-0c29603b2c9e___First-Cabo-Verdean-green-bond-listed-on-LuxSE.
Government of Luxembourg (2021), Inclusive and Innovative Finance Strategy, https://cooperation.gouvernement.lu/dam-assets/publications/strat%C3%A9gies/strategie-finance-inclusive/Inclusive-and-innovative-finance-strategy1.pdf.
Luxembourg Green Exchange (n.d.), The home of sustainable finance, https://www.luxse.com/discover-lgx.
OECD (2025), OECD Development Co-operation Peer Reviews: Luxembourg 2025, OECD Development Co-operation Peer Reviews, OECD Publishing, Paris, (forthcoming).
OECD (2024), “Sustainability-Linked Bonds: How to make them work in developing countries, and how donors can help”, OECD Development Perspectives, No. 44, OECD Publishing, Paris, https://doi.org/10.1787/7ca58c00-en.
OECD (2023), "Green, Social and Sustainability Bonds in Developing Countries: The case for increased donor co-ordination", OECD Development Perspectives, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/1cce4551-en.
To learn more about Luxembourg's development co-operation, see:
OECD, "Luxembourg", in Development Co-operation Profiles, OECD Publishing, Paris, https://doi.org/10.1787/87b15adf-en.
See more In Practice examples from Luxembourg here: https://www.oecd.org/development-cooperation-learning?tag-key+partner=luxembourg#search.
