A $700 million start: A new financial trend emerges with issuance of the world’s first dedicated climate resilience bond by the EBRD

On September 20, 2019, the European Bank for Reconstruction and Development (EBRD) successfully launched the first-ever dedicated climate resilience bond, raising $700 million (USD) with the issuance.

This is a major step forward in the development of capital market instruments that can crowd in private finance at scale for climate resilience,” said Craig Davies, Head of Climate Resilience Investments at the EBRD.

The proceeds from the four-year bond will be used to finance the Bank’s existing and new climate resilience projects. These will typically fall under one of three categories:

  • Climate resilient infrastructure (e.g. water, energy, transport, communications and urban infrastructure);
  • Climate-resilient business and commercial operations; or
  • Climate-resilient agriculture and ecological systems.

Currently, the EBRD has a portfolio of some €7 billion in climate-resilient projects. Examples include the Qairokkum hydropower upgrade in Tajikistan and the Saiss water conservation project in Morocco.

The EBRD’s Climate Resilience Bond will be issued in conformity with the four core principles of the Green Bond Principles, while the projects earmarked for the Use of Proceeds are selected and managed in alignment with the Climate Resilience Principles, published on September 17, 2019 by the Climate Bonds Initiative (CBI).

The principles provide clarity on the broad range and scope of potential resilience investments, incorporating climate resilience in the Climate Bonds Standard.

Recently in New York City, the United Nations Climate Action Summit saw renewed calls for financial innovation to build climate resilience, as recently outlined by the United Nations Environment Programme (UNEP) Finance Initiative and the Global Centre on Adaptation.

EBRD headquarters in London.
Photo courtesy of EBRD.

The EBRD is a pioneer in financing projects promoting renewable energy and combating climate change. Since 2010, the triple-A-rated Bank has issued over €4.5 billion of green bonds denominated in 14 currencies with the proceeds earmarked to support key environmental projects.

Anna Creed, Head of Standards at the Climate Bonds Initiative, added, “We congratulate the EBRD on the launch of their dedicated Climate Resilience Bond and taking the lead in the initial implementation of the Climate Resilience Principles within their green bond programme. The alignment of their Resilience Bond with our newly launched Climate Resilience Principles (CRP) is a powerful example for green bond issuers, investors and the market of the practical application of the CRP. It reflects the increasing importance of directly addressing adaptation and resilience factors in climate finance and investment.

BNP Paribas, Goldman Sachs, and Skandinaviska Enskilda Banken AB acted as joint bookrunners, which saw demand from approximately 40 investors in 15 countries.

Featured photo via Adobe Stock.

See EBRD website.

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