Citi, Its €1 Billion Green Bond and the Booming Market

By  //  January 28, 2019

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The U.S. bank giant and one of the world’s top banks, Citi, has issued on January 22, 2019, a whopping €1 billion ($1.14 billion) three-year fixed-rate note which taps the European market.

This marks the bank’s first green bond issuance. The bank now joins its U.S. peers Morgan Stanley, Bank of America and Merrill Lynch in the green bond market bandwagon which is dominated by Chinese gargantuans.

Historically, Citi has pledged to finance environmental projects that will address climate change and its impact on the environment, and provide solutions to protect the planet. In 2014, the bank co-founded the “Green Bond Principles”, a set of guidelines recommending transparency, disclosure and integrity in the issuance of green bonds and the development of the green bond market.

“Since we co-founded the Green Bond Principles in 2014, Citi has played a leading role in the development of the green bond market, and we look forward to maintaining our commitment as this market continues to grow,” said Michael Verdeschi, Treasurer of Citi.

In 2015, the bank embarked on a $100 billion environmental finance goal that would fund eco-friendly projects including water quality and conservation, sustainable transportation, renewable energy, green building and energy efficiency.

In 2017, Citi announced that it will use 100% of its worldwide energy needs through renewable source by 2020. These and other initiatives are the bank’s way of contributing to the achievement of the United Nations 17 Sustainable Development Goals (SDGs).

“We are proud to start the year with the launch of our inaugural green bond. This transaction represents an important next step in expanding Citi’s commitment to sustainable growth. This bond also further enhances our green bond expertise, strengthens our partnerships with clients around the world and responds to increasing investor interest in sustainable finance,” said Jamie Forese, President of Citigroup and Head of the Institutional Clients Group.

The market kicked off with the issuance of the first green bond amounting to €600 million in 2007 by the European Investment Bank (EIB). Since then, the market has achieved exponential growth to zoom into $155 billion worldwide in 2017.

The rise, although modest, continued in 2018 with a $167 billion total green bond issuance from 44 countries, based on preliminary figures for the 4th quarter of 2018. These statistics are based on the data by Climate Bonds Initiative (CBI), a global non-profit organization with a certifying role in the issuance of green bonds. With the win-win solution for both the investor and the bond issuer, the market is poised to continue soaring in the coming years.

Climate change has already wreaked havoc on many parts of the planet. Nations across the world are being hit by highly destructive storms and a drastic rise in sea levels.

Sadly, people from developing countries suffer the worst. The green bond market was formed to act on this challenge by funding projects that will not just combat the impact of climate change but also create sustainable solutions that will minimize, if not eliminate, greenhouse gas emissions, the primary contributor of damage to nature.

Whether it is the construction of green buildings with desert decor in Phoenix or the erection of windmills to lower coal production, the green bond market is sure to answer nature’s call for help.

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