Environmental experts believe that it has become necessary to have a map for economic activities concerning climatic, environmental and social goals. From this point of view, some countries of the world tend to find financing institutions for the purpose of directing their financial capabilities to environmental causes with the goal of mitigating any adverse impacts. One of those institutions concerned with the environment is the European Investment Bank (EIB), which has specialised in issuing climate-awareness bonds since 2007. These green bonds have become increasingly important in directing capital towards sustainable economic activities at a time the European governments are working to issue legislations related to the sustainable financing of these bonds.
Data released by the bank indicates that the total issuance of green and social bonds for sustainability has amounted to about 2.2 trillion euros globally since the initiative first emerged about 15 years ago. EU legislation on sustainable finance is committed to supporting the further growth of environmental issues on the ground.
The world's first climate awareness bond was issued on July 5, 2007. According to the bank's data, these bonds, with the use of the proceeds earmarked, allow investors to track the flow of their money into a sustainable economy, thus enhancing transparency, accountability, reliability and comparability in sustainable finance. These funds contribute significantly to mitigating climate change, supporting the fields of renewable energy efficiency, and working to deal with innovative technologies that are characterised by low carbon-based activities. This contributes significantly to achieving environmental and social goals, including climate mitigation, pollution prevention, universal access to healthcare and clean and affordable water, as well as support for projects related to the Covid-19 control, education, housing and forestry programmes.
Today, the European Investment Bank is the multilateral development bank's largest issuer of green bonds. Over the past few years from 2019 to 2022, the share of these bonds in the total EIB issuance has grown from 7 per cent to 27 per cent, spurred by investor demand for larger and more liquid bonds. On the fifteenth anniversary of the issuance of the first green bond, the European Investment Bank announced in May the distribution of its first climate awareness dividend of €4 billion due on June 15, 2032.
The President of the European Investment Bank believes that financial markets play a key role in addressing climate change and achieving sustainable development goals, stressing that a low-carbon economy cannot be achieved without directing more money from public and private investors to clearly defined green projects. This issue is also linked in how to tackle poverty in all its forms if long-term financing for sustainable infrastructure is not provided. There is a link between sustainable finance and sustainable projects that turn investors' money into a public good from dealing in the green, social and sustainability bond markets. Such a model can also be a paradigm for the Gulf region to consider in its own efforts to establish a similar financial institution with a mandate to contribute and finance environmental projects.
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