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What is a World Bank Green Bond?

About the World Bank

The International Bank for Reconstruction and Development (IBRD), commonly known as “the World Bank”, was founded in 1944 with the mission of financing the reconstruction of Europe after World War II. Nowadays, the mission of the World Bank is to work with middle income countries to reduce poverty and promote shared prosperity by providing them with financing and knowledge services.

 

The World Bank supports sustainable development, poverty reduction and inclusive growth across a range of sectors including among others: agriculture and food security; education; energy; finance, trade and industry; healthcare and social services; law and governance; transport; and water and sanitation. World Bank projects undergo a rigorous review and approval process including early screening to identify environmental and social impacts and designing concrete mitigation actions to address them. Projects eligible for Green Bond financing are a subset of the World Bank’s activities promoting sustainable development where addressing the impacts of climate change is the primary objective.

 

The World Bank’s headquarters is located at The World Bank, 1818 H Street, NW Washington, DC 20433 U.S.A.

Why did the World Bank create Green Bonds?

Climate change affects all of us. But it is expected to hit developing countries the hardest. Its potential effects on temperatures, precipitation patterns, sea levels, and frequency of weather-related disasters pose risks for agriculture, food, and water supplies. At stake are recent gains in the fight against poverty, hunger and disease, and the lives and livelihoods of people in developing countries.

 

Tackling this immense challenge must involve both mitigation—to avoid the unmanageable—and adaptation—to manage the unavoidable—all while maintaining a focus on its social dimensions.

 

Addressing climate change requires unprecedented global cooperation across borders. The World Bank Group is helping support developing countries and contributing to a global solution.

What makes the World Bank Green Bonds « green »?

All World Bank bonds support sustainable development, poverty reduction and inclusive growth. The World Bank’s Green Bonds are a subset of sustainable investment opportunities focused specifically on climate change mitigation and adaptation. The key characteristics of World Bank Green Bonds include:

 

  • The bond proceeds support the financing of a pool of projects aimed at mitigating the impact of climate change or helping the populations adapt to its effects (there is no specific allocation of the proceeds of the Bond to one specific project)2.
  • The projects are carefully selected by the World Bank, based on the eligibility criteria that underwent an independent review by CICERO (Center for International Climate and Environmental Research of the Oslo University).
  • The projects are monitored throughout their implementation: government agencies report the projects’ progress and the World Bank monitors the agreed milestones towards achieving the project’s objectives.

What investment opportunity do World Bank Green Bonds represent?

World Bank Green Bonds are an opportunity to support climate solutions through a high quality bond product.

 

The triple-A credit quality of the Green Bonds is the same as for any other World Bank bond.

 

Since its first Green Bond launched in 2008, the World Bank has raised over US dollar 8.5 billion through about 100 Green Bonds in 18 different currencies all over the world.

 

Green bond proceeds are used to support projects in member countries that meet specific criteria for climate mitigation and adaptation2.

Comments on Green Bonds

Doris Herrera-Pol

Director and Head of Global Capital Markets at the World Bank

« Green bonds are building an engaged investor base to finance low-carbon development. Our latest World Bank Green Growth Bonds represent a further step in the development of the green bond market because they reach retail investors seeking to benefit from the financial performance of an equity index which engages corporates on their energy transition strategy, while supporting climate-focused activities in World Bank member countries. »

Nicolás Estupiñán

Vice Minister of Transport, Colombia who worked with the World Bank on Colombia’s Urban Transit Program

«We can see notable changes in the quality of life of people. They have a significant reduction in their travel time. Other result indicators include high employment generation and reduction of negative impacts such as fatalities caused by transportation related accidents. »

Frank R.

Investor in green bonds

“When investing in green bonds I know that the funds will be used to finance projects having a real impact on the environment and on the life of the people affected. Moreover, with the World Green Growth Bond, my investment is in the World Bank, which has the safest rating on the market.”

1
Under the conditions specified in the Final Terms.
2
For a detailed description of the use of proceeds and eligible projects, please refer to the Final Terms
For more information on the projects supported by World Bank Green Bonds, please visit the website http://treasury.worldbank.org/cmd/htm/MoreGreenProjects.html
and see the World Bank Green Bond impact report: http://treasury.worldbank.org/cmd/pdf/WorldBankGreenBondImpactReport.pdf