Key players in the Luxembourg financial industry’s effort to prioritise green goals are simultaneously ensuring that oil & gas companies can continue to warm the planet, in some cases until late this century, according to a news investigation by the Luxembourger Wort daily.
The role played by key actors such as the Luxembourg Stock Exchange, major commercial banks and prominent legal and corporate administration firms has been examined in an international media-driven investigative series coordinated by the Follow The Money and Investico platforms. The Luxembourg paper was part of the international investigation.
According to the Wort report, the Luxembourg stock exchange has facilitated the trading of 126 fossil-fuel bonds with an issued value of 191 billion euro since 2016. The exchange bills itself as a leader in the commercial viability of green bonds.
Listing securities makes up the lion’s share of the LuxSE’s revenues, the report said. Over 80 percent of bonds the exchange listed last year lacked sustainability aspects. LuxSE said that according to its latest data - as of 2022, 82 percent of the money raised through bonds listed on its exchange was from non-sustainable bonds.
Shadow capital prevention
The LuxSE has defended its role in support of fossil financing by pointing to the risk of the development of shadow capital markets if fossil fuel firms were denied access to capital through conventional avenues.
“Our objective is to help transform capital markets so that finance supports the real economy and reorient capital flows towards investment projects and companies that contribute to positive environmental and societal outcomes,” said the LuxSE in a statement emailed to Investment Officer on Wednesday. “This does not imply that we will stop serving issuers from hard-to-abate sectors from one day to the next as transition takes time.”
Separately, the news report highlighted the activity of Russian government-owned oil company Gazprom. Three financing subsidiaries of Gazprom in Luxembourg have floated 6.8 billion euro in bonds between 2016 and 2021.
Long-dated bonds
The report also highlights that most fossil fuel bonds on the market are long-dated, which means they don’t mature until after 2030, in some cases not until 2090. This suggests that either investors see that oil & gas firms will successfully transition into clean fuels or that fossil fuels will remain profitable until well after deadlines set by the world’s scientists.
The investigation is entitled “The Great Green Investment Investigation: Fossil Finance.” It was initiated by Dutch platforms Investico and Follow the Money. The consortium includes Germany’s Handelsblatt, Denmark’s Børsen, the UK’s The Guardian and France’s Le Monde. Luxembourg media outlets the Luxembourg Times and the Luxembourger Wort are also participating.
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