Climate Action

$1.4bn launch for world’s largest green bond fund

The world’s largest green bond fund has been launched with the intention of greatly accelerating green finance in emerging markets.

  • 20 March 2018
  • Adam Wentworth

The world’s largest green bond fund has been launched with the intention of greatly accelerating green finance in emerging markets.

The International Finance Corporation (IFC), part of the World Bank, and Amundi, Europe’s largest asset manager, co-launched the fund last week.

The new pot of money, called Amundi Planet Emerging Green One, attracted a wide range of investors, including the European Investment Bank (EIB) and Crédit Agricole. While it closed at $1.42 billion on Friday, it is expected to deploy $2 billion into emerging markets over its lifetime.

The fund aims to support climate-smart investments and “significantly increase the scale and pace of climate finance in emerging markets”, according to a statement. Proceeds will be used through to 2025 and reinvested every 7 years.

The IFC provided a $256 million start-up commitment, while the European Investment Bank poured in $100 million.

Philippe Le Houérou, IFC CEO commented: “The global market for green bonds has expanded rapidly in recent years—totalling more than $155 billion in 2017, but few banks in developing countries have issued such bonds. IFC and Amundi expect this new fund to encourage more local financial institutions to issue green bonds, by increasing global demand and building local markets.”

While the market for green bonds is still small, estimated to represent just 1 percent of all global bonds issued, it is expected to grow 30 percent this year alone. Some developing countries, such as Nigeria, have also signalled their intention to use green bonds to fund climate adaption and mitigation projects.

Yves Perrier, Amundi CEO said: “This landmark transaction with IFC contributes to Amundi’s innovative and leading role in the climate finance space. Leveraging on Amundi’s emerging market debt investment capabilities, our commitment to ESG, and IFC’s unique outreach in emerging countries, Amundi Planet is a one-of-a-kind example of the potential that public private partnerships can bring to investors and to the society.” 

EIB Vice-President Ambroise Fayolle, added: “This exciting new initiative will transform sustainable investment in countries that are the most vulnerable to climate change, and enable local financial institutions to issue green bonds”.

Alongside the fund, a new technical assistance programme, managed by the IFC, will be created to develop green bond policies and training for bankers.