European Investment Bank issues €500m Sustainability Awareness Bond

The European Investment Bank (EIB) has issued a €500m (£448m) Sustainability Awareness Bond designed to boost capital market and private sector transparency for climate-related risks and opportunities.

Announced on Thursday (6 September), the Sustainability Awareness Bond will initially focus investment towards water supply, sanitation and flood protection projects. A focus will be placed on high-impact investments based on detailed reporting and transparency.

“The launch of the EIB’s new Sustainability Awareness Bonds today demonstrates the EU Bank’s firm commitment to unlocking finance for high impact projects in sustainable sectors beyond climate. Sustainability Awareness Bonds build on the global success of green bonds, ensuring the confidence of socially responsible investors through rigorous transparency and market standards,” the EIB’s president Werner Hoyer said.

“We have selected the water sector as a starting point, as it is a mature sector, with well-defined impact indicators. We look forward to expanding the scope of the Sustainability Awareness Bonds in the coming months to cover health and education, which are key sectors where we can improve people’s daily life around the world.”

The new Sustainability Awareness Bond will complement the Bank’s various green bonds that support renewable energy and energy efficiency projects globally, such as the Climate Awareness Bonds (CABS). The EIB has issued more than €23bn (£20bn) through CABS since 2007.

The Bank revealed that the new bond offering will not be limited to EU nations, noting the importance of delivering sustainability projects to developing nations as well.  

The EIB’s parent group has taken steps to align internal practices with its green bond offerings. The Group, which consists of the EIB and the European Investment Fund (EIF), has halved its emissions intensity over the past decade, despite staff numbers increasing more than two-fold over the ten-year period.

The finance firm’s emissions intensity per employee stood at 5.98 tco2e in 2017, marking a 49.9% decrease on 2007 levels.

Bonding opportunity

The EIB states that global investors have a crucial role in achieving the Sustainable Development Goals (SDGs). Notably, the United Nations estimates that $6trn of new investments are needed to reach the Global Goals.

The green bonds market grew by a staggering 78% between 2016 and 2017, with national and institutional investors funnelling more than $150bn into low-carbon projects. However, it is the growth of specialised funding that is driving the sector.

The World Bank, for example, has revealed plans to launch the world’s first series of bonds aimed at advancing water and ocean stewardship and has priced the first bond at 85m. It follows the World Bank’s green bond directly linking financial returns to companies performing to the standards and aims the SDGs.

Matt Mace

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