As Werner Hoyer sat down in UN Secretary General António Guterres’s New York office last January, the clouds outside darkened. Rain poured so heavily against the windows that the president of the European Investment Bank could no longer even see the Manhattan skyline.
But inside, the discussions were bright and clear. Hoyer told Guterres that the EU bank would take a leading role in financing the UN’s 17 Sustainable Development Goals. He also announced that the Bank had decided to launch a new kind of financial instrument, a Sustainability Awareness Bond, to help meet these goals.
“We want to bring about a new paradigm for development,” said Hoyer, who also had met with Guterres in July last year to talk about sustainable investment. “Our new sustainability bonds will launch a new dialogue on sustainable development.”
Fast forward nine months and the EIB has issued its first Sustainability Awareness Bond, with an initial launch on 6 September of EUR 500 million. The funds raised through the bonds will be used to finance social, green and sustainable projects around the globe.
An estimated USD6 trillion in new investment is needed to meet the UN goals in areas such as poverty, living standards, clean water, education, health care, global warming, gender equality and social justice. The EIB committed to these goals when they were announced in 2015.
“At the EIB, we have had a mission for a long time that commits 25 percent of our financing to the climate and environment,” says Patricia Castellarnau, an EIB water economist who has worked closely on the new bonds. “The sustainability bonds give us an extra incentive to look for projects with a significant sustainability impact.”
At first, money raised from the new bonds will support drinking water, sanitation and flood protection projects. Future bond issues will target more social sectors, such as health care, education and gender.