The fund’s first sale of Euro-denominated green debt instruments targets a robust and growing market
Since its inception just a decade ago, the green bond market has swelled to a total value of US$500 billion. It reflects a growing encroachment of ESG investing into the mainstream — and one of Canada’s major pension funds is riding deeper into the wave.
The Canada Pension Plan Investment Board (CPPIB) has issued its first Euro-denominated Green Bond. The 10-year fixed-rate notes, which amount to a total sale of 1 billion euros, will enable CPPIB to invest further in eligible assets and diversify the fund’s investor base.
CPPIB has recently invested in Green Bond-eligible investments, including a joint venture in renewable power and offshore wind assets. In 2018, CPPIB acquired 49% of Enbridge’s stakes in two German offshore wind projects, as well as a 49% interest in some of Enbridge’s North American onshore wind and solar assets.
“The European market for Green Bonds is robust and gaining even more traction amid changes such as the EU's increased targets for how much of the region's consumed energy comes from renewable sources," said Poul Winslow, senior managing director & global head of Capital Markets and Factor Investing.
“The capital raised will help finance our expanding portfolio of eligible green assets and demonstrate how we integrate environmental considerations into our investment decisions,” he added.
CPPIB made its inaugural Green Bond offering in June 2018, making it the first pension fund to make any such market offering. The sale of the Canadian dollar-denominated 10-year bond resulted in a total of $1.5 billion in capital raised from investors.
CPPIB’s Green Bond Framework defines three eligible categories for investment from Green Bond proceeds:
- Renewable Energy (wind and solar);
- Sustainable Water and Wastewater Management; and
- Green Buildings (LEED Platinum certified)
The framework has been evaluated by the Center for International Climate Research (CICERO), a globally recognized leader in providing second opinions on the qualification of debt for Green Bond status.