Scaling Finance for Subnational and Corporate Climate Action through Green Bonds
The Global Green Bond Partnership (GGBP) was launched yesterday in San Francisco, at the Global Climate Action Summit (GCAS). This new partnership will support efforts of sub-national entities such as cities, states, and regions, corporations and private companies, and financial institutions to accelerate the issuance of green bonds.
The founding members of the Global Green Bond Partnership GGBP include the World Bank, IFC – a member of the World Bank Group, Amundi, European Investment Bank, Climate Bonds Initiative, Ceres, ICLEI – Local Governments for Sustainability, Global Covenant of Mayors for Climate & Energy (GCoM) and the Low Emissions Development Strategies Global Partnership (LEDS GP).
“In the past decade green bonds have proven to be a real force in driving commercial financing into climate-smart investments and hold great promise for further scale up. IFC looks forward to participating in the Global Green Bond Partnership and collaborating with other pioneers to accelerate the issuance of green bonds and crowd in additional climate finance,” said Vikram Widge, Global Head, Climate Finance and Policy at the International Finance Corporation.
The UNFCCC estimates that USD 1.5 trillion of financing needs to be mobilized every year to 2030 to fully implement the Paris Agreement(1). The European Investment Bank and the World Bank pioneered the first green bonds, with EIB issuing the Climate Awareness Bond in 2007(2) and the World Bank issuing its first green bond in 2008(3). The green bond market continues to grow at a rapid pace, growing from annual issuance of USD 3.4 billion in 2012 to USD 161 billion in 2017(4). As governments and corporations alike recognize, the green bond market offers significant global opportunities to mobilize capital at scale for low carbon, climate resilient infrastructure and development efforts.
“The brown to green shift in corporate balance sheets and capex directions needs accelerated action from the world’s biggest banks, largest emitters and institutional investors. The international green bond market is now the platform for this large scale shift, with the target of trillions in new capital mobilised towards climate adaptation and resilience, clean energy and green infrastructure,” said Sean Kidney, CEO, Climate Bonds Initiative.
The members of the Global Green Bond Partnership (GGBP) will work together to scale green bond issuance primarily by sub-national entities and corporations through targeted technical assistance, capacity building, de-risking, investing, and underwriting support, as well as supporting development of innovative funds and other financial vehicles to mobilize investor capital.
“Scaling up green finance is crucial to tackle climate change and implement the Paris agreement. As the first and largest issuer to date the EIB recognises the key potential of green bonds to accelerate low carbon investment and enhance investor support. As the EU Bank we welcome the new Global Green Bond Partnership that will tackle barriers to green bond issuance. Enabling green bonds to be issued for the first time by new public and private partners, including in emerging and developing economies, will allow even more eligible projects to benefit.” said Jonathan Taylor, European Investment Bank Vice President responsible for climate action.
The Partnership will coordinate with efforts such as IFC’s Green Cornerstone Bond Fund Support Program to compliment the Amundi Planet Emerging Green One Fund and other targeted efforts to support the overall growth of the green bond market.
“Amundi, as a leading green manager and investor in the global clean energy transition, looks forward to working with Global Green Bond Partnership members to identify new opportunities to support the fight against global warming,”said Stanislas Pottier, Chief Responsible Investment Officer, Amundi.
Additionally, the GGBP members intend to work together on the development of a Green Bonds Readiness Framework/Toolkit for potential issuers, designed primarily for sub-national entities and corporations, that will enable them to rapidly assess their readiness to issue green bonds and identify key gaps and barriers to issuance.
The GGBP will also collaborate among its members to advance coordinated provision of technical assistance and capacity building activities across the member’s respective green bond activities and areas of expertise. The GGBP members will work through existing partnerships and institutions to deliver these services.
In addition, GGBP members will seek to engage with and provide technical assistance to Signatories of the Green Bond Pledge(5) (GB Pledge) to assist the development process around inaugural green issuance.
The World Bank Group regularly innovates new ways to help cities finance low carbon and climate resilient infrastructure. The Partnership will leverage this know-how while expanding our reach to developing countries and cities eager to use green bonds as a key element of their climate finance strategy,” said Ms. Laura Tuck, Vice President for Sustainable Development, who announced the new partnership today at the Global Climate Action Summit.
The LEDS GP, a global peer-to-peer exchange network, will serve as the interim secretariat of the Global Green Bond Partnership. Members will work together to identify concrete outcomes and milestones for the partnership and hold at least one joint outreach event by the end of 2018.
Transformative milestones by the founding members of the GGBP:
World Bank Group: Issued one of the first green bonds in 2008(3)
International Finance Corporation (IFC) – a member of the World Bank Group: First institution to issue a $1 billion global benchmark green bond in 2013. In March 2018, IFC and Amundi launched the world’s largest targeted green bond fund, which is expected to deploy $2 billion into emerging markets green bonds over its lifetime 4,(6).
ICLEI – Local Governments for Sustainability (ICLEI): ICLEI has supported the development of guidance on green bonds for local governments, working with CBI and other partners. As a partner of the GCoM, ICLEI provides technical and policy assistance to cities and towns, also helping them to access finance and use appropriate finance mechanisms.
Ceres: Issued the Green Bonds Principles in 2014
Climate Bonds Initiative (CBI): Climate Bonds has developed a science based, Standards and Certification Scheme used by green bond bond issuers, governments, investors and financial markets to assess the climate credentials & environmental integrity of bonds, loans & debt based based investments.
Amundi: IFC and Amundi launched the world’s largest targeted green bond fund to date, which is expected to deploy $2 billion into emerging markets green bonds over its lifetime 4,5.
EIB: Issued the first Climate Awareness Bond bond in 2007(2)
GCoM: developing, in collaboration with its founding partners, partnerships and tools to accelerate local governments’ capacity to access financing mechanisms at the scale and speed needed to meet the Paris Agreement objectives.
Global Green Bond Partnership Founding Members:
World Bank Group (WBG)
International Finance Corporation (IFC) – a member of the World Bank Group
Local Governments for Sustainability (ICLEI)
Climate Bonds Initiative (CBI)
Low Emissions Development Strategies Global Partnership (LEDS GP)
European Investment Bank (EIB)
The Global Covenant of Mayors for Climate and Energy (GCoM)
(1) Bridging Climate Ambition and Finance Gaps UN Climate Press Release 13/112017
(2) Ten years of Green Bonds: Join the celebration European Investment Bank
(3) Green Bonds, The World Bank
(4) Climate Bonds Initiative
(5) Green Bond Pledge https://www.greenbondpledge.com/
(6) Amundi to Create World’s Largest Green-Bond Fund Dedicated to Emerging Markets, IFC (April 2017)