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EIB issues first Sustainability Awareness Bond

The European Investment Bank has issued its first Sustainability Awareness Bond -high-impact water projects will be the first to benefit.

The €500 million transaction represents the first EIB funding intended to directly support sustainable finance and builds on the EIB’s pioneering role unlocking investment through green bonds.

Launching the bonds, Werner Hoyer, President of the European Investment Bank, commented:

“The launch of the EIB’s new Sustainability Awareness Bonds today demonstrates the EU Bank’s firm commitment to unlocking finance for high impact projects in sustainable sectors beyond climate. Sustainability Awareness Bonds build on the global success of green bonds, ensuring the confidence of socially responsible investors through rigorous transparency and market standards.

“We have selected the water sector as a starting point, as it is a mature sector, with well-defined impact indicators. We look forward to expanding the scope of the Sustainability Awareness Bonds in the coming months to cover health and education, which are key sectors where we can improve people’s daily life around the world,” said

The new Sustainability Awareness Bonds complement Climate Awareness Bonds (CABs), the EIB’s established green bonds that support renewable energy and energy efficiency projects worldwide.

The United Nations estimates that $6 trillion of new annual investment is needed to successfully tackle Sustainable Development Goals (SDGs)  and the new Sustainability Awareness Bonds will strengthen investor support for transformational sustainable investment.

Initial focus on water projects and expected expansion to other sectors

The European Investment Bank is one of the largest financiers of water projects worldwide and proceeds from the first Sustainability Awareness Bonds will be allocated to water investment.

The sectors include:

  • sustainable use and protection of water and marine resources;
  • transition to a circular economy, waste prevention and recycling;
  • pollution prevention and control;
  • protection of healthy ecosystems.

Initially, Sustainability Awareness Bonds will focus on investment in water supply, sanitation and flood protection. They are expected to expand to other sectors such as health and education once detailed reporting frameworks are in place.

Focus on high-impact and transformational investment

Sustainability Awareness Bonds will focus on high-impact investments selected on the basis of EIB’s sector and impact definitions, which will enable detailed reporting and transparency.

The EIB has in-depth technical and financial experience financing projects worldwide. The  Bonds will support projects both across the European Union and in emerging and developing economies.

Reflecting the high-impact focus and specific sustainable investment challenges it is expected that the new bonds will include stronger support for projects outside the European Union than overall EIB financing activity.

Building on EIB’s pioneer role in the green bond market

Sustainability Awareness Bonds build on the success of EIB’s Climate Awareness Bonds (CAB’s). The EIB pioneered the green bond market in 2007 and has since issued more than EUR 23 billion equivalent of CABs – it continues to be one of the largest issuers of green bonds.

The bond issue has been broadly welcomed by investors.

Dennis van der Putten, Director Sustainability & Strategy at ACTIAM ACTIAM commented:

“ACTIAM is happy to invest in the new EIB Sustainability Awareness Bond and, together with the EIB and other SRI investors, contribute to meeting the 17 Sustainable Development Goals, as defined by the UN. This bond especially is a perfect fit for the key themes ACTIAM has chosen for its ESG strategy (climate, water and land) to deliver relevant investment solutions, maximizing longer-term financial, environmental and social returns. ACTIAM wants to actively contribute to invest within the planetary boundaries.”

Christopher Flensborg, Head of Climate & Sustainable Finance at SEB added:

“SEB is very pleased to be a part of this ground breaking transaction which represents a landmark in the development of the sustainable bond market. The importance of supporting European and global infrastructure – and in particular water infrastructure which was the focus of EIB’s inaugural SAB transaction – is key to all of our clients, who showed their commitment to raising awareness around water solutions by means of a simple and well-structured investment opportunity.“

The transaction attracted broad investor demand from the outset, with books exceeding € 700 million within one hour. Participating investors included: ABN Treasury, Achmea Investment Management, Actiam, Alecta, Banca Popolare Di Sondrio, Banca Profilo SpA, Bankhaus Lampe, Candriam Investors Group, Danske Bank Asset Management, De Volksbank, PGGM, APG Asset Management and Union Investment.

Investor distribution statistics  based on final allocations by type of institution were as follows:

  • Pension / Insurance – 33%
  • Banks – 33%
  • CB/OI – 18%
  • Fund Manager – 16%

WaterBriefing is media partner with the Financial Times upcoming FT Water Summit Opening the Floodgates: Unleashing Returns from Water Investments which takes place in London on 17th October 2018

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