Green and SDG-Themed Bonds Presentation - EIB Workshop
The European Investment Bank (EIB), as the bank of the European Union, specializes in long-term lending operations to promote integration, balanced development, and economic cohesion among EU Member States. Through initiatives like climate finance and green bonds, the EIB is committed to sustainability and social impact, supporting projects both within and outside the EU. The bank's emphasis on environmental, infrastructure, innovation, and SME priorities underscores its role as a climate finance pioneer and a global leader in sustainable investment.
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Green and SDG-Themed Bonds Presentation to Workshop - Philippe Szymczak Lima, 29 May 2018 European Investment Bank Group 1
1. Introduction to EIB Presentation contents 2. EIB experience in climate finance and green bonds 3. A new product SDG-themed bonds European Investment Bank Group 2 12/03/2025
EIB: the bank of the European Union The EIB is the EU's bank for long-term lending operations. The EIB's remit is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States. Since 1963, the EIB has also carried out operations outside the EU in support of the EU s external policies. Established in 1958 by the Treaty of Rome. The shareholders of the Bank are the EU's Member States. The largest multilateral lender and borrower in the world. The Bank raises its resources by borrowing on the capital markets. It passes on its favourableborrowingterms to its customers. Some 450 projects are financed each year, in over 160 countries. In 2017, EIB Group signed operations worth EUR 78.2 bn, of which EUR 7.9 bn outside the EU. The EIB's headquarters are in Luxembourg supported by 40 local offices worldwide, about half of it outside the EU. The Bank has around 3,000 financial specialists, engineers, sector economists and social and environmental experts. European Investment Bank Group 3
EIB Group financing in 2017: EUR 78.2bn Signatures EFTA & Enlargement Countries Eastern Neighbours EUR 0.9bn EUR 1.6bn Africa, Caribbean, Pacific, South Africa EUR1.5bn European Union 70.2bn Outside EU 7.9bn EUR EUR Asia and Latin America EUR 2.0bn Total EUR 78.2bn Mediterranean EUR 2.0bn 4 12/03/2025
Our priorities Environment Infrastructure Innovation SMEs EUR EUR EUR EUR 19.7bn 16.9bn 13.5bn 33.6bn 5 12/03/2025
Climate finance pioneer USD100bn 2016-2020 EUR 19bn for climate in 2017 6 12/03/2025
EIB - world leader in Climate Finance Climate Action lending in 2016 USD bn 25 20 17.3 Advanced Economies 15 10 11.5 5 1.0 4.4 4.3 3.5 0 1.7 IDBG EBRD World Bank Group AfDB ADB EIB Source: MDB Joint report on Multilateral development banks Climate finance and internal sources for Advanced Economies stat http://www.eib.org/attachments/press/2016-joint-report-on-mdbs-climate-finance.pdf European Investment Bank Group 7 12/03/2025
EIB the pioneer of Green Bonds 86,822 81,215 Green Bond volumes triple in 2014 and the first version of the ICMA Green Bond Principles is published In 2007 EIB issues the world s first Green Bond called Climate Awareness Bond 42,674 37,055 10,769 3,892 3,321 1,123 909 807 414 ytd 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 EIB Other SSA Corporate Muni *Issuance in USD m Source: Climate Bond initiative and JP Morgan as of 4 October 2017 European Investment Bank Group 8 12/03/2025
Supra Green Bonds volumes & market shares Outstanding supra Green Bonds* (over USD 100m) Leading supply of Supra Green Bonds** (2017 issuance in USD m) IBRD EBRD 4% AFDB 3% NIB 8% IFC NIB IBRD 9% EIB 52% ADB ADB 11% EIB IFC 13% 0 2000 4000 6000 *Source: Cr dit Agricole CIB, as of 5hOctober 2017 **Source: JP Morgan as of 4thOctober 2017 European Investment Bank Group 9 12/03/2025
Sustainable Development Goals (SDGs) The Sustainable Development Goals (SDGs), developed by the United Nations, have emerged as the reference global framework for sustainable projects The SDGs - Are a universal set of goals, targets, and indicators, covering a broad range of social and economic development issues Apply to all countries in the world Have become the global framework used to frame agendas and policies over the coming years until 2030 European Investment Bank Group 10 12/03/2025
Sustainability Awareness Bonds will be modelled on EIBs Climate Awareness Bonds. The new bond will build on success of Green Bond pioneered 11 years ago by EIB. EIB has recently announced a new bond in support of sustainable development The aim is to support the achievement of the SDGs by further unlocking investment in social, green and sustainable projects First bond to be issued later this year First bond will focus on the water sector ... and will be later expanded to health and education Sustainability Awareness Bonds The United Nations have welcomed the new financial product as major step in the international development effort
At their Finance Ministers Meeting in March 2017, the G-20 requested EIB and IDB to propose ways in which private capital could be crowded in for infrastructure and sustainable and developmental projects and sectors in emerging markets A new offer, building on EIB s In response to this request, EIB and IDB cooperate to develop and operationalise a new instrument, specifically the SDG-themed bonds experience and working together with In Latin America, EIB and IDB are now working together to explore opportunities to operationalise the instrument IDB Across the world, investor interest in environmentally and socially responsible investing is rapidly growing The issuance of bonds that are themed (largely green, but not only), is also growing rapidly in many regions including Latin America European Investment Bank Group 12 12/03/2025
Image result for brde brazil SDG-themed Bonds Structure Private sector investors External Reviewer Certifies that proceeds have been used for sustainable investments related to the targeted SDG(s) Purchase bonds Anchor Investment SDG-themed bonds Technical Assistance Issues SDG- themed bonds Latin American bank Sustainable Investments Loans European Investment Bank Group 13 12/03/2025
EIB and IDB support a Latin American bank to access international capital markets and to become an issuer of SDG-themed bonds Bonds issued in an international market, for example Luxembourg, under international law and in international currency (EUR or USD) The bonds incorporate an obligation to use the proceeds exclusively for projects with positive social outcomes linked to one or more SDGs (we would suggest between 1 and 4 SDGs) SDG-themed Bonds concept summary This results in increased available funds to finance targeted SDG-eligible investments in the countries in which the bond-issuing bank is active Scheme based on a combination of Technical assistance to the bond-issuing bank provided and overseen by IDB The purchase by EIB, as an anchor investor, of a portion of the bond issue An independent external verifying organization which will give its stamp of approval to the framework for how bond proceeds are used, their link to the SDGs, and the mechanics for how this is controlled European Investment Bank Group 14 12/03/2025
Technical Assistance offer Second Party Opinion Portfolio Bond Roadshow Issuance Structuring Identification Development of final public offer package Capacity development of finance and treasury teams about themed bond opportunities Communications and promotion Review, revision and approval by recognized second Party of package of portfolio + strategy for use of proceeds + reporting mechanism Definition of certification methodology to be applied (climate, green or sustainable bonds) Support to present institution and pipeline to national and international investors Sharing of lessons learned with other NDBs Assessment and classification of potential social portfolio for bond issuance Definition of final pipeline and amount to be issued Definition of use of proceeds Assessment of institutional ESG capacity and strategy Definition reporting system Credit enhancement feature European Investment Bank Group 15 12/03/2025
Anchor investment by EIB EIB could act as an Anchor Investor, purchasing a portion of issuance Proportion of issuance to be determined. Likely to be in the range of 20-30% - depending on the size of the issuance Purchased at market price Bond issuance Anchor Significant added value of EIB presence, helping to broaden investor base. Viewed by the market as a sign of issuance quality- On the bond issuance itself On the robustness of the Framework for use of proceeds EIB was a pioneer and leader of Green Bonds Provides confidence to other investors to buy the bonds - investors take comfort from the presence of EIB investment by EIB International issuance, under international law Issuance in international currency EUR, USD European Investment Bank Group 16 12/03/2025
Broadening of investor base (social / green / sustainability investors) High visibility issuance supported by two Multilateral Development Banks (EIB and IDB) and with a link to the United Nations SDGs Why consider issuing an SDG- themed bond Technical Assistance from IDB to support in setting up the bond - build capacity in structuring a bond issuance and in setting up frameworks for the use of proceeds and impact reporting (for future themed bonds) Anchor investment from EIB, providing a signal to other investors European Investment Bank Group 17 12/03/2025
Concluding Remarks: SDG-themed bonds are a promising avenue to mobilise private capital and contribute to the achievement of SDGs EIB, together with the IADB, are committed to operationalise this solution, capitalising on, the respective experience and strength of both institutions. We are currently exploring the LAC market s concrete needs and potential with potential issuers and look forward to contributing to the implementation of this innovative solution. 18 12/03/2025
