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12.03.2019 | Sustainable finance
Since the first Climate Awareness Bond was issued in 2007, green bonds have enjoyed staggering success. As the fight against climate change increases, BNP Paribas has become a leader in this fast developing market. Watch our video for details from our expert, Neven Graillat.
A green bond is a debt issued to investors on the market by a company in order to enable it to finance or refinance projects that will contribute to the ecological transition and that meet investors' ESG (environmental, social and governance) criteria. Projects will concern, for example, renewable energy development, the introduction of efficient energy devices, sustainable waste and water management, the sustainable use of land or new types of private transport. Bonds cannot be classified as green unless they offer detailed reports on the investments and the environmental nature of the projects they are financing.
The first green bond was issued by the European Investment Bank (EIB) in 2007. Since 2014 the market has exploded, growing by a factor of almost 40 from 4.5 to 167 billion dollars by 2018. Last year and despite a stagnant global bond market, growth continued at around 3%. As a result, green bonds today account for 2.8% of all bond issues world-wide, compared with 2% last year. The forecasts for next year are very encouraging. According to Moody's, the rating agency, 2019 could see the 200 billion dollar threshold being achieved (+20% on 2018).
One of the sector's pioneers, BNP Paribas has been involved in sustainable investment since 2002. Its asset management branch currently holds 35 billion euros in Socially Responsible Investment (SRI) and almost 900 million euros invested in green bonds - a world record. Over the last six years the Group has been joint lead manager for 10.2 billion euros, 1.1 billion euro of which in equity-linked bonds. At the end of 2017, BNP Paribas also launched its own green bond fund - Parvest Green Bonds that in 2018 recorded investments worth 5.3 billion euros. At the start of 2019 the Group also issued its first green bond on the Stockholm stock market for Swedish clients and investors.
With a total of almost 50 billion euros in green issues since 2012, France is in pole position on the European market and holds 3rd place on the world podium in this field. In 2017, France itself launched its first green sovereign bond, becoming the first country in the world to issue a major green bond. Strong demand led to the original issue being supplemented by several tap issues. As a result, investment in 2018 was a record 15 billion euros. Most of the financed projects concern the energy transition tax, environmental research, Earth observation space technology, maintaining waterways and forestry management.
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