Market of green financing instruments for pro-ecological buildings growing

Since 2007, when the European Investment Bank (EIB) issued the world's first Climate Action Bond (CAB), green bonds have evolved from a marketing tool into one of the fastest-growing investment vehicles. This trend is also visible in the real estate market and is expected only to strengthen.

According to the Climate Bond Initiative (CBI) report, the so-called sustainable debt reached 1.7 billion by the end of 2020. 2020 was a record year in terms of the value of issued instruments, which amounted to $700 billion, almost twice as much as the year before. While Green Bonds continue to be the dominant asset, investment in Social Bonds and broadly defined Sustainability Bonds issues are growing rapidly, reaching volumes higher than in all previous years combined. 

As a result, the total issuance in 2020 was more evenly distributed among Green, Social, and Sustainability Bonds compared to previous periods.  

The German Berlin Hyp stands out among commercial real estate banks. The bank has been issuing green bonds for several years, and in April 2021 it became the first bank in the world to issue a Sustainability-Linked Bond (SLB), worth €500 million. This is the first instrument issued by a financial institution that directly links the cost of incurred debt with the issuer's achievement of the ESG target, namely a 40 percent reduction in the carbon footprint of the loan portfolio by 2030 compared to 2020. 

“Since 2015, when we issued our first Green Bond, we are still the largest commercial bank issuer of this type of bond. Sustainable debt instruments continue to be of great interest to buyers. This is due to the ever-increasing role of sustainable policies among institutional investors as well as regulatory requirements introduced at the European Union level,” Justyna Kędzierska-Klukowska, Head of Warsaw Office at Berlin Hyp, said.

(WBJ)