The European Bank for Reconstruction and Development (EBRD) has issued the world’s first dedicated climate resilience bond, which successfully raised $700m.
Demand came from about 40 investors in 15 countries and BNP Paribas, Goldman Sachs, and Skandinaviska Enskilda Banken AB acted as joint bookrunners. “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 EBRD’s four-year bond will finance both its existing and new climate resilience projects. Typically these will fall under climate-resilient infrastructure, climate-resilient business and commercial operations, or climate-resilient agriculture and ecological systems.
Currently, the EBRD has a portfolio of almost €7bn in climate-resilient projects. It provided a €120m loan to the Saïss Water Conservation Project in Morocco two years ago. In 2019, the EBRD financed $196m to upgrade Qairokkum hydropower in Tajikistan, while also sponsoring the completion of 16 solar plants at Egypt’s Benban solar park.
The Climate Bonds Initiative (CBI) published the Climate Resilience Principles (CRP) on September 17, 2019, which provided clarity on the broad range and scope of potential resilience investments, incorporating climate resilience in the Climate Bonds Standard. The recently passed United Nations Climate Action Summit saw renewed calls for financial innovation to build climate resilience.
“We congratulate the EBRD [for] taking the lead in the initial implementation of the CRP within its green bond programme,” said Anna Creed, head of standards at the CBI. “The alignment of their Resilience Bond with our newly launched CRP reflects the increasing importance of directly addressing adaptation and resilience factors in climate finance and investment.”
As a pioneer in financing projects promoting renewable energy and combating climate change, the EBRD has issued more than €4.5bn of green bonds denominated in 14 currencies since 2010, with the proceeds earmarked to support key environmental projects.