Luxemburg’s finance minister Pierre Gramegna has backed the launch of a ratings initiative for green bonds.
LuxFlag, a ratings agency based in Luxembourg, said it was bringing “strict” criteria to the market in green bond issuance, which last year doubled in size.
Green bonds are issued by companies and governments and must be used for green initiatives.
Gramegna said: “The green bond market is evolving rapidly and requires high transparency and evidence that proceeds are used for green projects only.”
The new label requires green bond issuers to report qualitative and quantitative performance indicators in their management of proceeds from bond issuance.
Among other criteria a green bond must follow internationally recognised standards on transparency, such as those set out in the Green Bond Principles or the Climate Bonds Initiative.
LuxFlag, which already rates social and environmental funds, will award or reject applicants quarterly based on applications from issuers.
©2017 funds europe