World Bank's green bonds clear $1bn mark

The latest issue of green bonds by the World Bank has taken the total amount raised to more than $1bn (£646m), the institution announced today.

The innovative bonds were first issued in late 2008, raising $350m and marking the first time the World Bank had offered bonds to raise funds for a specific purpose.

The bonds were developed in partnership with Swedish bank Skandinaviska Enskilda Banken (SEB), which confirmed that the most recent issue of SEK500,000,000 ($69.2m, £44.7m) helped take the total sold past the $1bn mark.

The bonds are used to raise money to support World Bank-funded projects that tackle the causes and consequences of climate change in the developing world, such as renewable energy installations, reforestry initiatives, watershed management and flood protection schemes.

"Climate action in developing countries – specifically, mitigation and adaptation initiatives – requires important financing by the international community, from both public and private sources," said Warren Evans, director of the environment department at the World Bank.

The latest issue of bonds saw investment from WWF-Sweden and the Swedish National Pension Fund, as well as a number of European private banks and life insurance companies.

The bonds will mature after seven years and promise return at rates of 3.25 per cent per annum – higher than Swedish government bond rates.

Klas Eklund, senior economist at SEB, said that the bonds had a central role to play in ensuring developing countries receive to the investment they need to cope with climate change. "The amounts involved in the negotiations on official climate financing are very small compared to the investment needs in emerging markets," he said. "Consequently, private financial flows must play the lead role. But for that to happen, investments must be profitable."

His comments were echoed by Thomas P DiNapoli, New York State Comptroller, an investor in USD-denominated World Bank Green Bonds, who argued that the bonds offer a win-win for sustainable investors.

"Investing in the World Bank's top-rated green bonds is a great way to promote smart and clean economic development in our planet's emerging economies while delivering dependable returns for the New York State Common Retirement Fund and its more than one million members," he said. "Investing in these bonds helps New York join the effort to curb harmful climate change while delivering bottom-line returns."