The first of its kind to be launched in the EU in September 2020, the bond has invested a total of €1,103m in various projects in Luxembourg over the period of 2018-2021. It has a volume of €1.5bn and a maturity of 12 years.
“These investments will, among other things, avoid almost 290,000 tonnes of CO2 emissions through a modal shift in passenger transport, produce 6.4 million cubic metres of biogas per year for energy production, restore and protect 8.6 hectares of natural habitat, increase the capacity of around 6,900 pupils and students, create around 550 hospital beds, build 1,478 affordable housing units and support 13 social inclusion projects,” the finance ministry promises in a press release.
Biggest investments in public transport infrastructures, housing and education
In 2021, investments in public transports --through projects like multimodal platforms or the construction of a new train line--went up, reaching close to €137m. Projects in water and wastewater last year received over €20m, while renovations and construction of education infrastructure took close to €61.5m. Hospital centres received around €35.5m for improvements to healthcare services and access and social inclusion projects such as the construction of care homes and youth centres were granted around €24.4m.
In 2021, investments by the sustainability bond in affordable housing more than doubled, increasing from €25,387,381 in 2020 to €52,831,175 in 2021. Though the lockdown in 2020 might have impacted efforts in this domain, new projects received support. Among these are the construction of properties and rental units all over the country. In 2021, the government had seen the demand for affordable housing rising as citizens worried about the housing market in the grand duchy. Housing minister Henri Kox in May 2022 said he was aiming for an investment of €500m a year to develop affordable housing.
While so far the bond has not yet invested in the protection of the environment, the report shows that it will start putting funds into the ecological renaturation of the Pétrusse valley in Luxembourg City.
External analysis of report
Key for this report is the transparency of the investments undertaken, says the finance ministry. “In order to ensure the highest possible level of transparency, this second report on sustainable sovereign borrowing includes allocation and impact reports and details key impact indicators on a project-by-project basis,” explains finance minister Yuriko Backes (DP).
ESG research, rating and data company Sustainalytics was in charge of evaluating the investments for 2021.
The allocation of proceeds is planned to end after the 2022 budget year. In the 2022 budget, the financing of several projects such as the construction of a modular building with specialised pediatric beds, as well as the construction of 117 rental units and 32 units for beneficiairies of housing allowances in Mamer are already featured.