The World Bank remains committed to sustainability and is one of the largest sources of development finance, achieving yet another impressive result in the euro market with its first euro-denominated benchmark of 2019, launched in May 2019. The €1.5 billion 10-year Global Sustainable Development Bond had a strong showing among international institutional investors seeking to support the World Bank’s twin goals of “ending extreme poverty” and “promoting shared prosperity in a sustainable manner”, aligned with the Sustainable Development Goals (SDGs). The bond was oversubscribed with an order book reaching €2 billion with orders from 69 investors.
The World Bank provides loans, guarantees, risk management products, and advisory services to middle-income member countries to support sustainable development projects and programmes across a range of development sectors such as health, education, agriculture, infrastructure, renewable energy, and climate change mitigation and adaptation. All World Bank projects are designed to achieve positive environmental and social impacts and outcomes consistent with the World Bank’s goals and the SDGs. Increasingly, investors are using the SDGs as a framework for investment and looking for opportunities to contribute to sustainable development outcomes.
With annual issuances of approximately $50 billion, the World Bank is a natural player promoting sustainable finance and its efforts represent a key lever for the achievement of the SDGs through cooperation with the private sector. As part of these efforts, the World Bank has chosen the Luxembourg Green Exchange (LGX), the first international platform for sustainable financial products, to display all of its Sustainable Development Bonds. The LGX platform now hosts over 200 Green Bonds and Sustainable Development Bonds issued by the World Bank, a great sign of recognition from an issuer that has influenced and shaped the market of sustainable financial products for decades. To celebrate the combined efforts of the World Bank and LGX to promote sustainable finance, a ‘Ring the Bell’ ceremony will take place on 26 June 2019 in the presence of Mr. Jingdong Hua, World Bank Vice President and Treasurer, to welcome the display of 174 Sustainable Development Bonds of the World Bank issued since summer 2017.
Launched in 2016, LGX has rapidly become the exchange of choice for major international issuers that influence the present and craft the future of sustainable finance. LGX’s success is linked to its strict selection criteria which are based on industry best practices. In fact, the entry on LGX is restricted to issuers that deliver on their commitment to provide full disclosure and fulfil their reporting obligations by ensuring a maximum level of transparency, a key driver for a market still in full development. Issuers are required to report on the use of proceeds of their bonds and the post-issuance reports of all issuers are available on the LGX website.
The cooperation between LuxSE and the World Bank goes back to the World Bank’s first listing in Luxembourg in 1953 and, more recently, the first Green Bond issued in 2008. From the outset, the World Bank led by example: it obtained a Second Opinion from CICERO, published a Green Bond Framework, sent its first Green Bond Newsletter to investors in 2009, and since 2015, it has published annual Green Bond impact reports, which are considered to be market best practice. Today, all of the World Bank’s listed Green Bonds are featured on LGX, totalling 34 transactions, representing the largest share of one issuer on our platform. Joining efforts to define the best criteria for Social and Sustainability Bonds, both LGX and the World Bank have supported the International Capital Markets Association (ICMA) in setting guidelines and principles for the industry. At the cornerstone of World Bank Sustainable Development Bonds lies a rigorous process, including how projects are carefully developed working together with member countries, and complying with the World Bank’s environmental and social framework. In line with the LGX admission criteria, the process defines Use of Proceeds for each bond, a Process for Selecting Projects, Management of Proceeds and publishing of project documents and reporting on impacts.
