10 Years of Green Bonds: World Bank Creating the Blueprint for Sustainability Across Capital Markets


The phone call to the World Bank Treasury came out of the blue: in late 2007, a group of Swedish pension funds wanted to invest in projects that help the climate, but they did not know how to find these projects. But they knew where to turn and called on the World Bank to help. Less than a year later, the World Bank issued the first green bond—and with it, created a new way to connect financing from investors to climate projects.

The green bond turned out to be a history-making event that fundamentally changed the way investors, development experts, policymakers, and scientists work together.

A joint commitment to finding a solution

In November 2008, the World Bank issued the first green bond. The bond created the blueprint for today’s green bond market. It defined the criteria for projects eligible for green bond support, included CICERO as a second opinion provider, and added impact reporting as an integral part of the process. It also piloted a new model of collaboration among investors, banks, development agencies and scientists. Ultimately, it was the result of their commitment, perseverance, and drive to find a solution.

The World Bank green bond raised awareness for the challenges of climate change and demonstrated the potential for investors to support climate solutions through safe investments without giving up financial returns. It formed the basis for the Green Bond Principles coordinated by ICMA, the International Capital Markets Association. It highlighted the social value that bonds could create and the need for a sharper focus on transparency.


Since then, the World Bank has raised more than US$13 billion through almost 150 green bonds in 20 currencies for institutional and retail investors all over the globe.

At the end of the fiscal year 2018, there were 91 eligible projects and a total of US$15.4 billion in commitments. Of these commitments, US$8.5 billion in Green Bond proceeds were allocated and disbursed to support projects in 28 countries and another US$6.8 billion had yet to be disbursed.

As of June 30,2018, Renewable Energy and Energy Efficiency and Clean Transportation projects represented the largest sectors in the Green Bond eligible project portfolio. Together, these sectors made up approximately 69 percent of the Green Bond commitments.

How do green bonds help tackle climate change?

Green bonds raise awareness for the challenges of climate change and demonstrate the potential for institutional investors to support climate-smart investments through liquid instruments without giving up financial returns. They also highlight the social value of fixed income investments and need for a sharper focus on transparency.

“We need bold action on climate change,” said Kristalina Georgieva, World Bank Group Interim President and World Bank Chief Executive Officer. “It comes down to a simple choice: we continue business as usual and hope for the best. Or we act now and build a resilient future. Our generation may not be able to solve all the problems related to climate change, but we can do our part to leave a better planet for the next generation.”

Green bonds have changed investor behaviors: ten years later, investors are publishing their names and providing quotes when they buy green or other labeled bonds and are much more aware of their power to support initiatives with their investments.

A sustainable revolution

Fast forward ten years. Capital markets have evolved from a market where investors knew and cared little about what their investments were supporting, to one where purpose matters more than ever. The basic green bond premise—with its model for project selection, second party opinion, and impact reporting—is being applied to other areas. As a result, there are now social bonds, blue bonds, and other bonds that raise financing dedicated to a specific development purpose. All follow the green bond model with its focus on impact reporting. More than US$500 billion in these kinds of labeled bonds have been issued since 2008.

“Investors want a competitive investment, but we see that more investors also want to put their money to have a positive and measurable impact on society,” said Heike Reichelt, World Bank Treasury’s Head of Investor Relations and New Products.

Investors’ interest in the social and environmental purpose of their investments reflects a fundamental shift in the bond market. Investors understand their power to support initiatives their stakeholders care about, that they do not have to give up returns.

They also want data that shows how they are addressing environmental, social and governance factors—particularly as they and they increasingly understand that in addition to creating social value, they are mitigating risk to their own investments. An issuer with good sustainability practices will generally be a better investment. Issuers are responding. Issuers are engaging with investors to show how their bonds present opportunities to achieve both financial and social returns.

Investors are looking beyond the narrow market of labeled bonds to understand how issuers use their investments. That market is much larger – the World Bank alone issues US$50 billion every year in Sustainable Development Bondsfor its development lending.

This revolution was sparked by green bonds. The bigger picture is to continue the revolution and momentum towards achieving the Sustainable Development Goals (SDGs) by 2030. The structure and reporting for bonds will continue to become more sophisticated, and one day every investor will ask “what’s my impact?” and expect clear and convincing data as the answer. There is a long way to go, but the imperative by climate change, urgency for action, the power of the capital markets, and the commitment by investors to do well by doing good will drive the development finance toward success.

10 Years of Green Bonds: Creating the Blueprint for Sustainability Across Capital Markets




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