IFC, a member of the World Bank Group, and Amundi, Europe’s largest asset manager, have launched the world’s largest targeted green bond fund focused on emerging markets, the Amundi Planet Emerging Green One (EGO). The fund, which closed at US$1.42 billion, is expected to deploy US$2 billion into emerging markets green bonds over its lifetime, as proceeds are reinvested during seven years.
With a US$256 million cornerstone commitment from IFC, the fund aims to increase the capacity of emerging market banks to fund climate-smart investments. The formation of the Amundi Planet EGO marks the end of a successful fundraising campaign, bringing together a large diversified network of institutional investors across Europe and the Middle East. The long timescale and large size of the fund, which will actively invest in emerging market green bonds issued by financial institutions through to 2025, is expected to significantly increase the scale and pace of climate finance in emerging markets by crowding in capital from investors and creating new markets. The fund is listed on the Luxembourg Stock Exchange.
“This landmark transaction with IFC contributes to Amundi’s innovative and leading role in the climate finance space. Leveraging on Amundi’s emerging market debt investment capabilities, our commitment to ESG, and IFC’s unique outreach in emerging countries, Amundi Planet is a one-of-a-kind example of the potential that public private partnerships can bring to investors and to the society,” says Yves Perrier, Amundi CEO.
The global market for green bonds has expanded rapidly in recent years—totaling more than US$155 billion in 2017, but few banks in developing countries have issued such bonds. IFC and Amundi expect this new fund to encourage more local financial institutions to issue green bonds, by increasing global demand and building local markets," adds Philippe Le Houérou, IFC CEO.
The fund is the first of its kind to take a holistic approach, by investing in emerging market green bonds, while also supporting the creation of a robust green bond market through tailored capacity building activities. An IFC-managed technical assistance programme, funded initially by a US$7.5 million grant from SECO (Swiss Secretariat for Economic Affairs) will support the creation of new markets for climate finance by developing green bond policies, providing training programs for bankers, and facilitating the adoption of the Green Bond Principles and international best practices in emerging markets.
The committed investor base consists of capital raised from leading pension funds (Alecta, AP3, AP4, APK Pensionkasse, APK Vorsorgekasse AG, ERAFP, MP Pension), insurance companies (Crédit Agricole Assurances, LocalTapiola General Mutual Insurance Company, LocalTapiola Mutual Life Insurance Company), asset managers, international development banks, and other institutions. For all institutional investors, this marks a strong commitment to green finance and, for some, a first move into emerging markets and/or green bonds.
Participation from IFC as an anchor investor, and other development finance entities such as the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and Proparco reflects the consolidation of support for green finance initiatives focused on combatting climate change and the ambition of the fund to set high standards of integrity for emerging markets green bonds.
To meet the fund’s goal of setting the market standard through the environmental and social requirements of the fund’s ESG policy, a scientific committee consisting of green finance experts from development institutions is being set up to advise Amundi as fund manager. The fund’s ESG policy reflects IFC’s 2012 Performance Standards and IFC’s Excluded Activities
Achieving the Paris Agreement will create significant investment opportunities. A recent analysis of the IFC shows that 21 emerging market economies alone hold US$23 trillion in climate-smart investment opportunities through 2030. The fund’s positive reception demonstrates the increasing appetite for climate investment. This transaction illustrates both IFC’s commitment to increase its climate investments to 28% from its own account, and mobilize an additional US$13 billion a year in private financing by 2020, as well as Amundi’s commitment to sustainable finance and leadership in offering attractive green investment solutions to investors across all asset classes.
