EBRD, IFC and EIB commit US$ 425 million to fund for green bonds in emerging markets

By Svitlana  Pyrkalo
@pyrkalo

Green globe

EBRD subscribes to US$ 68.5 million in “Amundi Planet – Emerging Green One”, the world’s largest green bond fund 

Three multilateral development banks have made a landmark investment in a fund that that will invest in green bond issuances by emerging market financial institutions, supporting the development of the green bond sector in emerging markets.

The EBRD has invested US$ 68.5 million in the “Amundi Planet – Emerging Green One” Fund which, with a total investor commitment of US$ 1.42 billion, is the world’s largest green bond fund and the first exclusively dedicated to emerging markets.

The IFC and the EIB have committed US$ 256 million and US$ 100 million to the Fund, respectively.

EBRD participation represents 5 per cent of the fixed-income Fund. In parallel with the investment, the EBRD is launching a dedicated Green Bond Technical Cooperation Programme in the Bank’s region which will help increase the issuance of green bonds to finance environmentally friendly projects.

“Amundi Planet – Emerging Green One” was set up by Amundi, Europe’s largest asset manager, in partnership with the International Finance Corporation (IFC), a member of the World Bank Group. It is the first fund which focuses on investing in green bonds issued by private sector financial institutions.

The Fund will allocate at least three times the amount of the EBRD’s investment to the EBRD’s countries of operations. The targets for the greening of the overall portfolio will also apply at the same rate to the amount allocated to the EBRD region.

The global market for green bonds has grown rapidly in recent years and exceeded US$ 155 billion of issuance in 2017, according to the Climate Bonds Initiative, an organisation promoting investments in low-carbon and climate-resilient assets.

Large regional gaps exist, however; few private sector companies and financial institutions have issued green bonds in the EBRD region, which includes central, eastern and south-eastern Europe, Central Asia, and the southern and eastern Mediterranean.

Through its participation in the Fund, the EBRD and other multilateral development banks will work to establish harmonised best practices for emerging market green bond issuances in line with the Green Bond Principles, the voluntary process guidelines developed by a broad forum of market participants, including the EBRD, and under the secretariat of the International Capital Market Association.

The EBRD is not only an investor in green bonds but also a major issuer of green bonds. The EBRD issued its first green bonds in 2010, supported by its green project portfolio, which includes more than 300 projects in excess of €3.5 billion. Since 2010, the EBRD has issued 67 green bonds totalling €2.4 billion equivalent.

The EBRD is also a leading international financial institution in terms of renewable energy and energy efficiency financing. It is the largest financier of renewable energy projects in its markets; 43 per cent of the Bank’s 2017 investment was made in Green Economy Transition (GET) projects, achieving the initial target under the flagship initiative two years ahead of schedule.

The EBRD invests in green projects across sectors, both directly and through intermediated channels. The sectors include clean energy, green transport, sustainable agriculture and manufacturing and services, and others.