Deutsche Bank supports guidelines for green bonds
In January 2014, Deutsche Bank joined a coalition of 13 major financial institutions in supporting a set of voluntary guidelines for ‘green bonds’ to finance environmentally friendly activities.
The guidelines will help ensure integrity and transparency for investors in this rapidly growing market. The Principles suggest a process for designating, disclosing, managing and reporting on capital raised from a Green Bond will be used.
These Principles build on first-to-market issuances by multilaterals and provide a platform for other future Green Bond issuers to direct funding to Green Projects. They are complemented by an appendix of established definitions of Green Project categories that were developed by multilaterals, non-profit and non-government organizations and other relevant stakeholders. Read more about the Green Bond Principles here.
Deutsche Bank’s Global Head of Debt Origination said: “As a carbon neutral bank, Deutsche Bank believes that the new Principles will play an important role in unlocking the green market capital necessary to finance the transformation to a cleaner and more sustainable future. We are pleased to be part of this collaborative effort.”
Using the debt capital markets is a priority to finance the low-carbon transition. Globally there was $254bn of renewable energy investments last year. This must double by 2020 and quadruple by 2030 if the world is to avoid the negative impacts of a global temperature increase of more than 2˚C. The planet is now on track for a 4˚C+ temperature increase which the World Bank says would be catastrophic (“a 4C scenario is potentially devastating”). Financial institutions can help society and their clients to invest in forward-looking environmental technology. According to estimates, the switch to a greener economy will require annual investments of $1 trillion – a significant business opportunity.
Deutsche Bank is also one of two other lead managers for the European Investment Bank’s first Climate Awareness Bond in 2014. The CHF 350 million bond is the EIB's first to be issued in Swiss Francs. Climate Awareness Bonds raise funds from fixed income investors to support EIB lending for renewable energy and energy efficiency.
The market size for climate change related bonds was estimated at $346bn, a 25% expansion from 2012. Nearly half of these bonds are investment grade, issued in a major currency and have an issuance size over $100mn.
Other signatories to the principles include Bank of America, Citigroup, Crédit Agricole CIB, JPMorgan Chase, BNP Paribas, Daiwa, Goldman Sachs, HSBC, Mizuho, Morgan Stanley, Rabobank and SEB.
“As a carbon neutral bank, Deutsche Bank believes that the new Principles will play an important role in unlocking the green market capital necessary to finance the transformation to a cleaner and more sustainable future.”