In the past three years, the market for green bonds has grown twelve-fold. Whereas three years ago the market was worth a total of around 8 billion euros, it is now worth more than 100 billion euros. ABN AMRO is active in this market, with its own green bond. Demand for this bond was even twice as high as the issued amount of 500 million euros.
What exactly is a 'green' bond?
A green bond is a bond that investors can use to invest in sustainable projects, such as loans for sustainable real estate or making public transport more environmentally friendly. How does it work? An institutional investor, like a pension fund, buys a ‘debt certificate’ from a bank or a company. The loan serves as financing for sustainable projects, and a fixed interest rate is paid on the loan. When they buy a green bond, institutional investors know exactly what the sustainable impact is of their investment. A third party checks whether the money is being used in a transparent manner.
ABN AMRO's 'green bond'
In June 2015, ABN AMRO was the first European bank to issue a large green bond. The bank intended to set the total amount at 350 million euros. In response to heavy demand from investors, we ultimately set the total at 500 million euros. We are using the proceeds to finance and refinance sustainable real estate: mortgages for energy-efficient homes, loans for solar panels and sustainable commercial real estate.
Our own green bond goes one step further. We produce ‘impact reports’ that give investors detailed information on how and where their investments are making an impact. The total carbon reduction achieved through our green bond comes to around 50,000 tonnes. That’s equal to the annual emission of more than 10,000 cars.
Externally assessed and certified
We have had our green bond externally assessed by Oekom, a sustainability rating agency, based on quality, sustainability and transparency, in accordance with the Green Bond Principles. Our green bond has also been certified by the Climate Bond Initiative, based on the standard for sustainable real estate developed by this organisation. This external validation is one of the reasons why the green bond has been so highly praised. We won the International Financing Review Green Bond of the Year award.