Germany’s second-largest Bank in terms of assets, DZ Bank, has joined the Climate Bonds Partner Program, to facilitate green bonds issuance and other green debt products, to raise capital in line with Germany’s ambitious climate targets.
DZ Bank has started its green bond activities in 2013 and has since then expanded its scope to sustainable bonds in general, becoming a leading European underwriter.
DZ Bank is also one of Germany‘s most important financiers of renewable energy projects, with a financing volume of currently about EUR4 billion. Via its Sustainable Investment Research arm, it has launched its own sustainability certificate for both bond and equity issuers (Seal of Quality for Sustainability).
In the European green bond market, Germany ranks second for issuance volume, totalling USD24.85 billion (including other green finance instruments) to date. However, there are only 12 German issuers, the majority of whom are made up of development, state-owned and commercial Banks.
Sean Kidney (pictured), CEO, Climate Bonds Initiative, says: “We are proud to be joining forces with DZ Bank. They have been active in the green bond market and have shown deep commitment to support environmentally and socially responsible projects and markets, having a critical role facilitating deal flow.
“German issuers have been some of the pioneers in the international green finance market, Germany is now the 5th largest source of issuance globally and 2nd in Europe. But despite the country’s wide climate action implementation to date, Germany could be missing its 2020 goal of reducing emissions by 40 per cent, if a more stringent climate agenda is not pursued.
“This partnership will help promote sustainable investments and climate finance solutions in the largest populated country and strongest economy among the EU member states.”
Friedrich Luithlen, Head of Debt Capital Markets, DZ Bank, says: “We consider ‘green finance’ part of our core business. Therefore, teaming up with the Climate Bonds Initiative is a great opportunity for DZ Bank to promote climate change action by facilitating green bond issuance. Green bonds across all asset classes play a key role for raising the private capital needed for the transition of the global economy into a more sustainable model.
“As green bond issuance in markets such as the US, China or the Nordics has been speeding up rapidly over the past years, Germany has been slower at embracing Green Bonds. This is due to a more fragmented German investor universe. But it is changing rapidly. German green bond pioneers from the SSA sector such as KfW or NRW.Bank have paved the way. Recently, we have seen first benchmark transactions in the corporate sector.
“2018 will be the year of several green and sustainable bond debut deals from corporates and financials in Germany, including promissory notes and covered bonds. Concurrently, ESG investor mandates are increasing both in number and in size. As Germany is committed to ambitious climate goals, we also expect municipalities and some of the German Laender to go green in the mid-term.”