FINANCE Ethical finance

Green finance in action

The proceeds of HSBC’s first-ever green bond have been allocated to support renewable energy, energy efficiency and waste management projects in 10 countries.
Green projects in the Czech Republic, France, Germany, Greece, Ireland, Italy, South Africa, Spain, Turkey and the UK will benefit.

The bond, which was issued by HSBC France in November 2015, raised EUR500 million of which EUR493 million has now been allocated. The funds have been used to provide loans and project finance to HSBC clients.
HSBC Group Chief Executive Stuart Gulliver said: “The technology and techniques needed to support a low-carbon way of life often require significant investment. I am proud that the proceeds of HSBC’s first green bond are helping clients turn their green aspirations into reality, building a more sustainable future.”
The projects include:

  • Building and operating wind farms in France, Germany, Greece, Italy, Turkey and the UK;
  • Financing solar plants and the purchase of solar panels in the Czech Republic and South Africa;
  • Installing “smart grid” meters for gas and electricity in the UK;
  • Financing sustainable waste management facilities in France and the UK, designed to improve recycling rates as well as converting waste into energy;
  • Constructing and operating a concentrated solar power plant in Spain, which will focus the sun’s rays before converting the energy into electricity; and
  • Building an anaerobic digestion plant in the UK that will capture carbon dioxide for use in the food and drink industry and reduce the release of methane into the atmosphere.

In total, 81% of the funds have been allocated to renewable energy, with 16% going to sustainable waste management and a further 2% to energy efficiency. The remaining 1% has yet to be used. Further detail on the 20 environmentally responsible projects to receive funding can be found in the bank’s latest Green bond report.

What is a green bond?

  • A green bond is a form of financing designed to support projects that have environmental or climate benefits
  • HSBC is a member of the International Capital Market Association’s Executive Committee for the Green Bond Principles, a set of voluntary standards for issuers of green bonds
  • According to these standards, the money raised from investors must be used on projects with environmental benefits: these could be in areas such as renewable energy, energy efficiency, waste management, clean transport, protecting biodiversity, water management or climate change adaptation
  • Institutions issuing green bonds must also meet certain standards for evaluating and selecting projects, tracking and managing the use of money, and reporting on progress
  • HSBC has formulated its own Green Bond Framework, in line with the Green Bond Principles, to guide its decision-making
  • The green bond market has grown rapidly in recent years, with bonds worth a total of USD118 billion outstanding in 2016.
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