ENGIE’s focus on the development of green energy has led to the Group’s firm commitment to green bonds, which are emerging as the investment option of the future.
Bonds have long been used by governments and corporations to finance a variety of projects, but with the increased importance placed on ecological efforts around the globe, the tide is changing for this age-old investment option.
Green bonds, as their name suggests, are bonds specifically used to finance environmental projects, such as the development of renewable energy farms or upgrades in energy efficiency. Issued by corporations, governments, organizations, these bonds are instrumental in helping reduce greenhouse gas emissions and contribute to a greener tomorrow.
In 2017, about $150 billion in green bonds were issued worldwide, doubling the volume issued the previous year, according to London’s Climate Bonds Initiative . This sudden growth can be attributed, at least in part, to the signing of the Paris Agreement, which forced world leaders to address the financing of the energy transition: With $93 trillion needed to meet agreed-upon low-carbon goals over the next 15 years, green bonds seem to be a viable solution.
ENGIE has been committed to green bonds since it first began issuing them in 2014. In 2018, with the issuing of a 1 billion Euro Green Hybrid Bond under the Group’s Green Bond Framework, ENGIE has become the largest corporate issuer of green bonds worldwide. To date, ENGIE has issued a total of 6.25 billion Euro in green bonds, allocating these resources to nearly 80 green projects.
ENGIE’s commitment to green bonds will only continue to grow. While the current green bonds market only makes up about 2 percent of the annual global bond issuance, ENGIE has recently joined eight other industrial issuers in Europe in a public commitment to increasing green financing.
“By matching the company´s long-term view and investors´ sustainability goals, ENGIE considers green bonds as a key lever to shape tomorrow´s low carbon and socially responsible energy world,” says Judith Hartmann, ENGIE Chief Financial Officer.
Because there is “no universally accepted definition” as to what constitutes a green bond, issues regarding the transparency of projects funded by these bonds could easily appear. To handle this challenge, ENGIE has developed a proactive solution: the establishment of a clear and public set of rules for the allocation of these funds.
In order to be funded by green bonds, projects approved by ENGIE must fulfill specific environmental criteria in eight categories: fighting climate change and protecting natural resources, environmental management, biodiversity, dialogue with stakeholders, business ethics, human rights, responsible health and safety purchase . In addition to the establishment of these criteria, ENGIE has committed to traceability processes and third-party verification with regards to funds allocations to ensure that green bonds are truly building a better, more ecological world.
1 Source : The New York Times, January 12, 2018.
2 Source : OCDE report.
3 Source “Green bonds: a cornerstone of sustainable finance”, Judith Hartmann.
4 Source ENGIE Green Bond 2018.