Financing Climate-Smart Investments through Capital Markets

 

As extreme weather conditions wreak havoc across the globe, it has become increasingly clear that everyone has a role to play in helping the world move to a low-carbon path. At IFC, we provide financing so the private sector can invest in renewable energy, energy efficiency, sustainable agriculture, green buildings, as well as adaptation to climate change.

One effective way to raise resources for these crucial investments is through the issuance of green bonds. Under IFC’s Global Green Bond Program, we have raised close to $4.5 billion over the past five years. Our recent green bond—a $500 million, three-year bond—was issued in November 2015 on the London Stock Exchange.

In the fiscal year ending June 30, 2015, 38 IFC investments received green-bond financing. These investments are expected to reduce greenhouse emissions by the equivalent of 2.5 million metric tons of carbon dioxide per year—a result similar to taking 500,000 cars off the road.

“Green bonds can play a powerful role in mobilizing additional funding to help fight climate change and reduce greenhouse gas emissions,” said Jingdong Hua, IFC Vice President and Treasurer. “IFC will continue bringing greater diversity, liquidity, and transparency to strengthen this important asset class.”

IFC is one of the world’s largest financiers of climate-smart projects for developing countries, with investments totaling about $13 billion over the past decade. For instance, Azure Power, India’s leading independent solar-power producer, has received $45 million in equity and debt from IFC to develop projects in India. The latest loan, of $14 million, was funded by proceeds of our Green Bond Program.

“IFC has provided funding that meets Azure Power’s growth needs at different stages,” Inderpreet Wadhwa, founder and CEO of Azure Power, said during the market opening ceremony on December 10 at the London Stock Exchange.

“IFC’s partnership is important for us to contribute to the realization of India's commitment towards clean and green energy, through solar power generation. IFC’s green bonds program offers an innovative financing structure for raising efficient capital for solar projects and, more specifically, reducing the cost of solar power for millions of consumers in India.”

In Brazil, Enel Wind received a $300 million financing package from IFC to construct over 300 megawatt of wind power energy in 12 power plants in Brazil. This package includes a $200 million loan financed by IFC’s Green Bond Program

“Our partnership with IFC is an integral part of Enel’s plan to help Brazil meet its growing power demand through renewable energy solutions”, said Michele Calderoni, Head of Finance and Insurance, Enel Green Power SpA. “It will also support the development of the country’s Northeast region through job creation.”

IFC issues green bonds in various structures and currencies, including Chinese renminbi, Indian rupee, Japanese yen, South African rand, and U.S. dollars. Two IFC benchmark $1 billion issues in 2013 set records as the largest green bonds in the market at the time of issuance.

Photo caption: London Stock Exchange welcomed IFC on December 10, 2015 to mark the listing of IFC’s $500 million three-year green bond. © IFC