Deutsch Bank to invest €1bn in green bonds

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Deutsche Bank has announced its intention to invest €1 billion (£730m) of its portfolio into green bonds, stating that the market “matured” last year and offers an opportunity to fund sustainable energy projects whilst achieving “attractive returns”.

Green bonds operate in the same way as traditional bonds, paying out interests at fixed periods, but fund a range of environmental projects, from renewable energy sources to protecting the environment. Deutsche Bank explains that the fixed income instrument offers competitive returns.

The bank has already made €200 million (£146m) investment in eligible green bond investments and now plans to grow this portfolio. The growth will be focused on new primary market investment in eligible sovereign, supranational and agency issued bonds.

Alexander von zur Mühlen, group treasurer of Deutsche Bank, said, “The green bond markets has matured during 2014 and the size and number of offering has substantially increased making green securities viable and prudent liquidity buffer investments.

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    “Deutsche Bank builds on the work of the bank’s successful Green Bond origination franchise in highlighting this opportunity to fund sustainable energy initiatives whilst achieving attractive returns.”

    Last year the green bond market saw rapid growth, reaching $36.6 billion (£24bn), according to figures released by the Climate Bonds Initiative. The figure for 2014 is more than triple the number recorded in 2013. The organisation also expects the market to nearly triple this year, topping $100 billion (£62bn).

    The announcement follow Citigroup pledging to lend, invest and facilitate a total of $100 billion (£65bn) to finance activities that will reduce the impacts of climate change and create environmental solutions.

    Photo: Images Money via Flickr

    Further reading:

    Citigroup to fund $100bn in green projects

    UN Green Climate Fund ready to mobilise finance

    Investors commit to expanding the climate bond market

    MPs issue stark ‘carbon bubble’ warning to investors and finance world

    Mainstreaming sustainable finance: UKSIF’s Edinburgh conference