Second-Party Opinion Download

Sustainalytics is of the opinion that the Grand Duchy of Luxembourg Sustainability Bond Framework aligns with Sustainability Bond Guidelines 2018. This assessment is based on the following:

USE OF PROCEEDS

The eligible categories for the use of proceeds (Green Buildings, Energy Transition, Low Carbon Transport, Protection of the Environment, Water and Wastewater Management, Climate Finance and R&D, Access to Essential Services – Healthcare, Access to Essential Services – Education, Access to Essential Services – Social Inclusion, Affordable Housing and Employment Generation and Socioeconomic Advancement and Empowerment) are aligned with those recognized by the Green Bond Principles 2018 and/or the Social Bond Principles 2020. Sustainalytics considers that the eligible categories will lead to positive environmental impacts and advance the UN Sustainable Development Goals, specifically SDGs 3, 4, 6, 7, 8, 10, 11, 12, 13 and 15.

PROJECT EVALUATION/SELECTION

The Grand Duchy of Luxembourg’s internal process in evaluating and selecting projects is coordinated by the Luxembourg State Treasury and managed by the Sustainability Bond Committee (the “Committee”) comprised of the Luxembourg State Treasury, the Ministry of Finance and the Inspectorate of Finance. The Committee will meet at least once a year. For refinancing, the lookback period is at three calendar years prior to issuance. Sustainalytics considers the project selection process in line with market practice.

MANAGEMENT OF PROCEEDS

The Grand Duchy of Luxembourg’s process for management of proceeds is handled by the State Treasury. The Luxembourg State Treasury is committed to reach full allocation within two years after issuance. Pending full allocation, net proceeds will be managed in accordance with the Grand Duchy of Luxembourg’s regulatory framework and treasury policies. This is in line with market practice.

REPORTING

The Grand Duchy of Luxembourg intends to report allocation proceeds publicly on an annual basis until full allocation. Allocation reporting will include an overview of the allocated proceeds, a breakdown of allocated proceeds by eligible categories and the amount of unallocated proceeds at the reporting end-period (if any). In addition, the Grand Duchy of Luxembourg is committed to reporting on relevant impact metrics. Sustainalytics views the allocation and impact reporting as aligned with market practice.

Alignment with the EU Taxonomy

Sustainalytics has assessed the Grand Duchy of Luxembourg’s Sustainability Bond Framework for alignment with the EU Taxonomy, and is of the opinion that, of the Framework’s 23 green use of proceeds categories, 19 align with the applicable Technical Screening Criteria (TSC) in the EU Taxonomy (while four could not be assessed) and that 20 align or partially align with the Do No Significant Harm Criteria (while three could not be assessed). Categories that could not be assessed either cannot be mapped to NACE activities in the Taxonomy and/or are designed primarily to advance an environmental objective for which TSC do not yet exist in the Taxonomy. No categories were determined to be not aligned. Sustainalytics is also of the opinion that the activities and projects to be financed under the Framework will be carried out in alignment with the EU Taxonomy’s Minimum Safeguards.