The European Investment Bank seems to be the best green bonds issuing performer, linking its individual green bonds to their own projects and advancing an initiative of transparent impact reporting, as a reaction to the world leaders' appeal to boost funding for environmental projects.
Climate bonds are the financial instruments with a fixed profit that are engaged in developing of environmental projects. Climate bonds are also called green bonds and are quite new type of investment resources. They are aimed at raising financing of environmental projects and solutions. As other bonds, green bonds can be issued by international banks, multi-national organizations or by state governments. Bonds system implicates further refunding of the money invested with additional payments, either specified earlier or rated in compliance with the project's revenues.
The beginning of Green Bonds issuing dates back to the 2007. Since that time the Climate Bonds extent has increased by dozens of times. In 2007 they were estimated to be on the level of $806 million and approached the milestone figure of $1 billion in 2009, while as of 2014 the green bonds reached the sums of about $37 billion. Furthermore, the figures are expected to exceed $100 in 2015. Currently the climate bonds are gaining even bigger popularity, due to the new bond-systems members entering the market. The world's developing economies, such as China and India start exploring the use of Green bonds, which may give another push to their issuing. The first Indian green bond was sold by Yes Bank Ltd. in April, 2015 to fund a low-carbon power project.
The extensive advancement of the climate bonds programs is now encouraged by different international agreements in the field of environmental protection. Green bonds provide additional funding for environmental projects, therefore contribute to the meeting of 2020 renewable energy targets in the European Union, 2 degree Celsius target and alike.
The European Investment Bank takes an active part in green bonds promoting and is one of the world's biggest climate bonds issuers. The EIB issues Climate Bonds for environmental programs in renewable energy, such as wind, solar, geothermal projects, and also for energy efficiency programs as district heating, energy loss reduction, equipment replacement and alike. As of 2015, the EIB has become the largest Green bonds issuer with EUR 7.6 billion raised.
Now the EIB is taking new steps in respond to the world leaders' call for boosting the funding of projects related to environmental change. The European Investment Bank became the first issuer to link its own green bonds to the project they finance. Bertrand de Mazieres, the director general of finance, EIB commented: "The EIB is supporting the EU's leadership in the climate issues, especially ahead of Paris climate conference, also through innovation the green bonds market. As the demand for green bonds has grown substantially, it may be a great contribution in addressing 2 degree Celsius target."
The EIB has also recently advanced the initiative of reporting on Green Bonds situation, publishing their conclusions on their "Climate Awareness Bonds". The main objectives of the reporting are the following:
-to display the compliance of the EIB green bonds with the newly published Green Bond Principles;
-to demonstrate the bondholders efficiency of the projects financed, such as GHG reduction, scaling down of the emission levels and so on, so that they could see, where their money are applied.
"The delivery of impact reporting is an important recommendation in the new GPB's. It may become a game changer, extending the debate from qualitative preferences to include achievement in environmental terms" – said Eila Kreivi, Director and Head of Capital Markets, EIB. Bertrand de Mazieres added to this remark, that the reporting initiative underlines the EIB's vision of market to be transparent for investors to make the right choices. "Transparency is vital for catalyzing stronger flows of capital into finance furthering environmental goals."
Such an approach to the Green Bonds shows the support of the EIB for developing the climate bonds market and its vital role in this process.
European Investment Bank (EIB) is a nonprofit long-term lending institution, founded in 1958 and it is owned by 28 EU member states, headquartered in Luxembourg.
Yes Bank Ltd. is the fifth largest private bank in India, founded in 2004, headquartered in Mumbai, India. Its total assets are estimated to be about $14 billion and it is the only Indian bank, which got the Greenfield license from RIB during recent years.
2 degree Celsius is an average temperature rise above the preindustrial level, claimed to be the ultimate limiting index. It was estimated in 1990s and during years has been an efficient mean of drastic climate changes prevention. But currently the figure of 2 degree is questioned and required to be decreased to 1 degree Celsius. As for today, 2 degree level is 1.4 degree above the actual average temperature.
