European Investment Bank going green May 30, 2007
Posted by James Webster in : finance, environment , trackbackContinuing my recent environmental and sustainability themes, I would like to point you towards the European Investment Bank’s Climate Awareness Bond. This product is available to investors across the European Union; that includes me since moving back to the UK just under a month ago!
This zero-coupon bond aims to raise funds for ‘dedicated use in sectors key to climate protection’ to the sum of €600,000,000. The redemption value of the bond is guaranteed at 100% of the initial investment with an excess yield between 5% or the performance of the FTSE4Good index, whichever is higher. The FTSE4Good index is comprised of European companies that have been judged to have a high degree of environmental awareness compared with their peers, although the skeptical might scoff at the inclusion of firms such as BP and Royal Dutch Shell. More information on the FTSE4Good index can be found here. One would hope that with the backing of the EIB the funds raised will be put to appropriate use.
The particularly interesting feature is that the product includes an option upon maturity to use excess yield above 25% to buy and cancel EU carbon dioxide allowances.
It is good to see capital markets introducing products such as this to help raise funds to address climate change whilst hopefully providing investors with a return above the market beta.
Comments»
This is great!