The EIB’s financing operations are funded by issuing bonds in international capital markets, underpinned by demand from international institutional investors. As a long-term financing institution, sustainability plays a major role in fundraising activities. In July 2017, we celebrated the tenth anniversary of the launch of the world’s first green bond, our ground-breaking EUR 600 million issue. At end-2017, we remained the largest issuer of green bonds worldwide with more than EUR 19.4 billion issued in the format since 2007.

At the EIB, we label our green bonds ‘Climate Awareness Bonds’ (CABs). Our CAB issues are ‘use of proceeds’ bonds, and the money raised can only be invested in projects that benefit the environment.

CAB Internal Criteria

Funds raised through CAB issues are earmarked to match disbursements to our climate action projects in:

• Renewable energy: for example, wind, hydropower, solar and geothermal energy production projects, and
• Energy efficiency: for example, projects for district heating, co-genera­tion, building insulation, energy loss reduction in transmission and distribution, and equipment replacement with significant energy efficiency improvements

2017 was a special year for us as we celebrated the tenth anniversary of our first CAB, from which the EUR 600 million of proceeds were allocated to 14 projects in six countries over 2007/2008. The issue of the Bank’s first CAB was inspired by the Berlin Declaration and the Energy Action Plan adopted by the European Council in 2007. Over the past ten years, we have executed more than 100 green bond transactions supplying more than EUR 19.4 billion across 11 currencies, with maturities of between two and 30 years. In 2017, EUR 4.3 billion was issued in the green format.

Initially, demand for green issues was limited, but the idea of a green fixed-income product gained traction quickly as climate change became a focal issue, and subsequently inspired the development of standardised reporting and governance. In recent years, new participants have steadily entered the market, encouraged by investors in search of a product that addresses climate concerns and at the same time provides returns. The EIB has acted as a market catalyst both through its issuance and by contributing to the development of governance and market standards, creating new opportunities for responsible investors.

To celebrate our ten-year milestone, the EIB partnered with the non-governmental organisation WeForest for the project ‘Plant a Tree’ designed to help make our world greener. During the second half of 2017, internet users were invited to support the project via the EIB website. For each signature received, six trees will be planted, leading to a total of 20,000 new trees. The trees are expected to be planted in Ethiopia during the plantation season in July and August 2018, as well as throughout the year in India to maximise tree growth in degraded areas.

To celebrate our ten-year milestone, the EIB partnered with the non-governmental organisation WeForest for the project ‘Plant a Tree’ designed to help make our world greener. During the second half of 2017, internet users were invited to support the project via the EIB website. For each signature received, six trees will be planted, leading to a total of 20,000 new trees. The trees are expected to be planted in Ethiopia during the plantation season in July and August 2018, as well as throughout the year in India to maximise tree growth in degraded areas.

Over the past decade, the EIB has pursued a best practice strategy. We have ambitious projects of collaboration with other market participants to map various green bond frameworks and identify modalities of alignment in terms of transparency and comparability of green bonds.

Among other things, the EIB is a leading contributor to the Green Bond Principles and chairs its Executive Committee. The four core components of the principles are use of proceeds, setting up a process for project evaluation and selection, the management of proceeds, and reporting. Deliverables from the principles include standardised issuer information forms, the Green Bond Information Template, and an external review form. The EIB also coordinated the development, by a group of 11 international financial institutions, of a harmonised framework for impact reporting on renewable energy and energy efficiency.

In the pursuit of increased transparency, the EIB, together with the Green Finance Committee of the China Society for Finance and Banking, launched a White Paper in November on the occasion of the COP 23 Climate Change Conference in Bonn. The White Paper provides an international comparison of several green bond classifications for the use of proceeds, aiming to enhance the consistency of green finance definitions and standards with a view to facilitating cross-border green capital flows.

CAB proceeds are allocated to projects worldwide. As part of our internal processes we assess the percentage of a project that fits into one of the two sectors of renewable energy or energy efficiency. Only that percentage of the project investment can receive CAB proceeds. Through its regular CAB Newsletter publications the EIB provides use of proceeds reporting, transparently listing allocations to individual projects, as well as impact reporting.

At the end of 2017, CAB funds had been allocated to 67 projects in 31 countries across the world. In that year, 61% of CAB proceeds were allocated to renewable energy projects. Over the same period, 84% of the funds were allocated to projects within the European Union, among them the Norther offshore wind farm. This renewable energy power plant will include 44 wind turbines equipped with approximately 80-metre-long blades off the Belgian coast. The renewably energy generated will supply electricity to around 324,000 Belgian families.

Since 2016, our external auditors KPMG Luxembourg have provided Independent Reasonable Assurance reports for our ‘green’ activities, the highest level of assurance provided in the segment. Through the independent verification, we are promoting higher standards in the disclosure and reliability of the growing green bond market.

Our annual CAB Statement describes in a comprehensive and detailed manner the EIB’s green bond activities as well as the overall framework, including the management of responsibilities, operational criteria, allocation and impact reports. It also includes the Green Bond Principles External Review Form as an appendix.

The EIB is proud of its excellent credit ratings from key international rating agencies. Moody’s, Standard & Poor’s and Fitch all rate EIB bonds with the highest-possible ratings (Aaa/AAA/AAA), underscoring our strong institutional backing from the EU Member States, our outstanding asset quality, and our conservative risk management. For the latest reports click on the logos: