- The goal is to ensure better access for European companies and green projects to market financing to speed up their energy transition
- This will be achieved by boosting supply and demand of green finance through:
- the development of three new segments on the European green bond market, offering attractive yields to institutional investors
- the creation of a European Green Transaction Network and a Scientific Committee to set and disseminate green standards
- Initial EIB investment up to EUR 60m
With a view to deploying the new financing needed to meet the Paris Agreement targets in the EU, European asset management leader Amundi and EU green bond pioneer the European Investment Bank (EIB) are signing a partnership to launch the Green Credit Continuum investment programme.
Over the last few years the European green financing market has mainly developed by way of green bond issuances from sovereign, quasi-sovereign and large corporate issuers. To finance additional efforts to promote European energy and ecological transition goals, new market instruments are needed that enable smaller companies and green projects to access market financing, as well as offer higher yields to investors.
The Green Credit Continuum programme therefore aims to foster the development of the green debt market beyond the existing green bonds, supporting small-scale green projects, and financing SMEs and mid-caps.
Signed at the Paris Europlace 2019 international financial forum, the agreement between Amundi and the EIB has three components. Firstly, it covers the creation of a diversified fund that will invest in green high yield corporate bonds, green private debt and green securitised debt. In parallel, a scientific committee of green finance experts will be formed to define and promote environmental guidelines for these three markets in line with international best practice and legislation derived from the European Commission action plan on financing sustainable growth. Lastly, a green deal network will be put in place to source deals and projects.
The goal of the agreement is to create several funds based on this model and to help establish market standards for these new green finance segments. It aims to raise EUR 1bn within three years, including a EUR 60m initial commitment by the EIB.
To meet its climate commitments under the Paris Agreement and finance the associated energy transition, Europe is missing an estimated EUR 180bn in financing a year until 2030. To reach this level of investment, green finance must mobilise all of the debt capital markets. Against this backdrop, the key role played by green bonds is widely recognised.
