www.climatebonds.net

Green bonds: A finance tool for

NDCs implementation

SIWI World Water Week

Justine Leigh-Bell, Director Climate Bonds Initiative

27 August 2017

What are Green Bonds?

Green bonds are debt securities issued by financial, non-financial or public entities

where the proceeds are used to finance 100% green projects and assets

Just like regular vanilla bonds. “green” is a bonus feature to the bond.

It’s about the projects and assets, not the issuer.

1. Proceeds go to Green2. External review/certification 3. Annual reporting

* New and/or re-financing

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Green bonds rapid growth

BENEFITS

IssuersInvestor diversificationMarket positioningPricing

InvestorsAddressing climate riskFinancial returns w/ environment benefitsSecondary market value

China went from zero to 40% of issuance in 2016

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Green bonds breakdown by Sector

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• Green bonds grow as a mainstream tool to help implement NDCs

• Sovereign Green Bond Programmes

• Capital raising plans for NDCs

Green Infrastructure Investment Coalition

• NDCs => 3-5 year green investment plans

• Investor-country dialogue

Developments Post Paris

The Europ

ean Inves

tment

Bank is the

European

Union’s non

profit long

-

term lendi

ng institut

ion

and the wo

rld’s larges

t

internation

al financing

institution

.

IDBI, a gov

ernment-o

wned bank

with

a balance s

heet of

USD53bn.

India’s Exp

ort

Import Ba

nk support

s green

projects ac

ross South

ern Asia

and Africa.

The Nation

al Institute

of Public

Finance &

Policy is a

leading

Indian thin

k-tank for

governmen

ts.

Deutsche

Bank

one of the

world’s

leading ban

ks.

Investor G

roup on

Climate Ch

ange

(Australas

ia)

GREEN BO

NDS & CA

PITAL MA

RKETS

Green Infr

astructure

Investme

nt Coalitio

n

Investors +

Public Sec

tor + Deve

lopment B

anks

At the UN

Climate C

onference

last year,

investors r

epresentin

g some $43

trillion of

assets und

er manage

ment signe

d stateme

nts

about the

importanc

e of acting

quickly on

climate ch

ange. The

y also said

they stand

ready to in

vest in clim

ate solutio

ns, with

insurers sp

ecifically a

iming to m

ultiply by 1

0

their clima

te related

investmen

ts by 2020

1.

Investors r

epresentin

g $2.6 trill

ion AUM

specifically

under took

to work w

ith the

Climate Bo

nds Initiativ

e to grow a

vibrant

green bond

s market

2.

Clearly, ca

pital is ava

ilable to in

vest.

From the i

nstitutiona

l investor p

erspective,

what’s mis

sing are av

ailable inve

stible

proposition

s suitable t

o their nee

ds.

Many gove

rnments ar

e well adva

nced in

developing

domestic

green inves

tment plan

s.

Now they

need inves

tment.

Objective

s

The aim of

the Coaliti

on is to br

ing togethe

r

investors,

governmen

ts and deve

lopment

banks to h

elp increas

e the flow

of institut

ional

investor ca

pital to gre

en infrastru

cture

investmen

ts around t

he world.

Participant

s want to:

Better un

derstand t

he forward

pipeline o

f

green infra

structure i

nvestment

s.

Examine

barriers to

capital flo

ws and

propose so

lutions

Shape th

e capital m

arket instr

uments

needed to

ensure ca

pital flows

.

The Coaliti

on will also

suppor t in

vestors to

review ass

et allocatio

n strategie

s to make

sure they

will be able

to take ad

vantage of

the

huge deal

flow on th

e horizon.

Participat

ion

Coalition m

embers are

investors,

governmen

t

and develo

pment ban

ks. Investm

ent banks

will partici

pate as ob

servers an

d facilitato

rs.

Activities

The primar

y activit y o

f the Coali

tion will be

to hold rou

ndtables to

find out a

bout and

discuss go

vernment g

reen inves

tment plan

s,

including sp

ecific pipe

lines being

developed

by individua

l agencies

such as St

ate energy

and rail co

mpanies.

Multi-trill

ion dollar

investor

coalition b

acks green

investme

nt

platform

The Climat

e Bonds In

itiative is

an investo

r focused

NGO work

ing to mob

ilize debt c

apital mar

kets for

green inves

tments.

The Princip

les for Res

ponsible I

nvestmen

t represent

investors w

ith assets u

nder mana

gement of

US$60

trillion.

The Intern

ational Co

operative M

utual Insu

rers

Federatio

n represen

ts insurers

around th

e world w

ith

assets und

er manage

ment of US

$9 trillion.

The UNEP

Inquiry br

ings togeth

er regulato

rs, central

banks, gov

ernments a

nd institut

ional inves

tors to

examine ho

w to align

the financi

al system w

ith

sustainable

developm

ent.

Coalition O

rganisers

The Instit

utional Inv

estor

Group on

Climate C

hange is a

network o

f +110 pens

ion funds

& asset ma

nagers in E

urope,

representi

ng EUR11 tr

illion.

Legal & G

eneral Inve

stment

Manageme

nt is one o

f Europe’s

largest ass

et manage

rs, with tot

al

assets of U

SD 1.1 trilli

on.

AB is a glo

bal investm

ent-manag

er

with USD4

64 billion u

nder

manageme

nt.

FICCI is th

e largest bu

siness

organisatio

n in India, r

epresentin

g

over 2,50,

000 comp

anies.

Pax World M

anagemen

t is

a US fund

manager w

ith an

Environme

ntal, Socia

l and

Governanc

e focus.

The Region

s20 Coaliti

on

helping su

b-national

governme

nts

develop lo

w-carbon

and climat

e

resilient ec

onomic

developme

nt projects.

Coalition M

embers The

following

organizatio

ns have co

nfirmed pa

rticipation

:

This broch

ure is an op

en invitati

on to orga

nisations

working to

deliver gr

een inves

tment plan

s, and to

investors,

to join this

Coaltion.

Sectors to

be represe

nted:

Governme

nt agencie

s responsib

le for gree

n

infrastructu

re develop

ment

National de

velopment

banks

Commercia

l banks wor

king to del

iver

national po

licy object

ives

Green Bon

d Developm

ent Comm

ittees, for e

xample

in Brazil, M

exico, India

, California

Institution

al investor

s around t

he world.

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Green Bond Principles – ICMA

Proceeds must go to green / Explain process for project selection; use 2nd party review / Track proceeds; use auditor to verify / Report each year on details

Climate Bonds Standard & Certification: incorporates GBPs into a standardized framework with green definitions

National Green Bond Guidelines: China, India, Nigeria, South Africa, Brazil

ASEAN Green Bond Framework

Moody’s/ S&P green assessment tools: quality of review & reporting

Guidelines and Reviews

The developing scope of the CBS Water Criteria

Engineered water infrastructure (i.e. built assets to capture, treat and deliver waste water and clean water, and assets to protect against flooding)

IN

Nature based water infrastructure (i.e. nature based assets and systems that provide, among other ecosystem services, the treatment, capture and delivery of water

PUBLIC CONSULTATION

Water infrastructure in other sectors (e.g. water infrastructure assets in the agricultural sector)

IN (with exceptions)

Water driven energy assets, including wave and tidal installations, and hydropower

UNDER DEVELOPMENT

Examples: Certified Water Climate Bonds

Issuer Size (USD) Use of proceeds

City of Cape Town

76M • water management initiatives (which includes water meter installations and replacements, water pressure management, and upgrade of reservoirs)

• sewerage effluent treatment• rehabilitation and protection of coastal structures

San Francisco Public Utilities

240M

Sustainable storm water management and wastewater projects included in the SFPUC Sewer System Improvement Program259M

Technical WG Industry WG

OECD

Seattle Public Utilities

DC Water

San Francisco Public Utilities

Abengoa

SEB

JP Morgan

Goldman Sachs

Bloomberg

European Investment Bank

World Bank

Asian Development Bank

International Hydropower Association

Alliance for Global Water Adaptation

Stockholm International Water Institute

World Resource Institute

CDP

Ceres

Colorado State University

University of Massachusetts

IUCN

Water Environment Federation

Chinese Academy of Sciences

Duke University

Deloitte

Charles River Water Authority

Consulted well over 100 individuals

Kindly Supported by

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