USA: IFC, a member of the World Bank Group, issued a $1 billion green bond that will be used to support IFC climate-friendly projects in developing countries. The bond sets a precedent as the largest green bond issue to date and was principally allocated to socially responsible investment portfolios.
By making the three-year bond a benchmark issue available to investors globally, IFC aims to strengthen this growing asset class. The bond, which was heavily oversubscribed, was sized to address the demand from an increasing number of investors interested in climate-related opportunities.
“IFC is ramping up its climate-related investments because the private sector can play a leading role in addressing climate change,” said Jingdong Hua, IFC VP and treasurer. “Through its Green Bond Program, IFC enables large-scale investors to support projects related to climate change in developing countries.”
In FY12, IFC invested $1.6 billion in climate-related investments—more than 10 percent of the institution’s overall commitments for the year. About 70 percent of IFC’s investments in the power sector involved energy efficiency and renewable energy. By FY15, IFC expects to double its climate-related investments to roughly $3 billion per year.
Stephanie Miller, IFC director of Climate Business, said: “The IFC Green Bond Program supports one of IFC’s strategic priorities to develop and promote innovative financial products that attract greater investments to support renewable energy, energy efficiency, and other climate-friendly projects.”
The bond received overwhelming support from investors focused on promoting socially responsible investments. Some of the participants in the bond include, 3M, Blackrock, the California State Teachers’ Retirement System (CalSTRS), Calvert Investments, Ellomay Capital, Fjärde AP-fonden, Ford Motor, Local Government Super (LGS), Parnassus Investments, Praxis Intermediate Income Fund , SSGA High Quality Green Bond Fund, TIAA-CREF, and the Washington State Investment Board among others.
Maria Kamin, manager of Environmental, Social and Governance Research at Parnassus Investments, said: "The IFC Green Bond complements our responsible investment strategies. We focus on incorporating environmental, social, and governance analysis into our investment research. By giving investors in the Parnassus Fixed-Income Fund exposure to this unique bond, we can further support climate-related investments and receive a positive financial return."
Bill Hartnett, Head of Sustainability at Local Government Super (LGS), said: “LGS is proud to be the ultimate owner of part of this IFC Green bond issuance. The green bonds appeal to LGS on many fronts. They are triple-A-rated notes with competitive terms. They are financing much needed green infrastructure projects globally.”
IFC green bonds support projects to reduce greenhouse emissions—for example, by rehabilitating power plants and transmission facilities, installing solar and wind power, and providing funding for new technologies that result in significant reductions in emissions. To date, IFC has issued about $2.2 billion in such bonds.
Criteria for the use of IFC green bond proceeds are certified by Cicero, an independent research center associated with the University of Oslo.
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