The EBRD intends to invest up to US$ 100 million in “Amundi Planet – Emerging Green One”, a fund designed to become the world’s largest green bond fund and the first exclusively dedicated to emerging markets.
Following approval by its Board of Directors, the EBRD plans to invest in up to 5 per cent of the fixed-income fund, which to date has raised already more than US$ 1.2 billion of committed investor interest.
“Amundi Planet – Emerging Green One” was set up by Amundi, the leading European asset manager, in partnership with the International Finance Corporation (IFC), a member of the World Bank Group. It is the first fund focusing on investing in green bonds issued by private sector financial institutions.
In connection with the EBRD’s participation, the fund will work to allocate a multiple of at least three times the Bank’s investment to the EBRD’s countries of operations as part of the fund’s regional diversification policy. The targets for the greening of the overall portfolio will also apply at the same rate to the amount allocated to the EBRD regions. The EBRD’s investment is subject to agreement of final terms and investment documentation.
The global market for green bonds has grown rapidly in recent years and exceeded US$ 100 billion of issuance in 2017, according to the Climate Bonds Initiative, an organisation promoting investments in low-carbon and climate resilience assets.
Large regional gaps exist, however: few private sector companies and financial institutions have issued green bonds in the EBRD regions which include central, eastern and south-eastern Europe; Central Asia; and the southern and eastern Mediterranean.
Through its participation in the fund, the EBRD will work to establish harmonised best practices for emerging market green bond issuances in line with the Green Bond Principles, the market reference developed by a broad forum of market participants, including the EBRD, and intermediated by the International Capital Market Association.
In parallel with the investment in “Amundi Planet – Emerging Green One”, the EBRD is launching a dedicated Green Bond Technical Cooperation Programme focusing on capacity building and green bond origination in EBRD countries of operations, increasing green bond supply to enable the financing of green projects.
EBRD President Sir Suma Chakrabarti said: “With around US$ 500 million worth of issuance by private sector financial institutions to date, green capital markets in the EBRD’s countries of operations are still in a nascent stage. This new fund is expected to contribute to significantly increasing the availability of green finance in the EBRD regions, raising awareness among domestic investors for green capital market products and supporting local financial institutions in issuing green bonds in line with the Green Bond Principles.”
Yves Perrier, CEO of Amundi, said: “Amundi welcomes the EBRD’s participation in this innovative fund structure. We value the EBRD’s extensive expertise in green capital markets and its long standing relationships with many financial institutions in the region. Jointly we will help to increase both demand for and supply of green bonds in emerging markets. The EBRD’s planned participation sends a strong signal to the market.”
The EBRD is not only an investor in green bonds but also a major issuer. The EBRD first started issuing green bonds in 2010, supported by its green project portfolio which includes more than 300 projects in excess of €3.5 billion. Cumulatively, the EBRD has issued 65 green bonds totalling €2.3 billion equivalent since 2010.