Prince Charles-led P8 Washington summit spurs $300m California investment in World Bank green bonds

Sweden’s SEB acts as lead manager for second issuance of IBRD climate change solution bonds.

The first fruits of a summit of the world’s biggest institutional investors in Washington last month have come with the announcement that the state of California will buy $300m (€229m) of World Bank green bonds in the state’s first investment in climate change solutions. The Washington meeting in March – revealed by Responsible Investor – brought together the P8 group of pension funds set up by HRH Prince Charles, the Prince of Wales and other large institutions at a meeting hosted by the International Finance Corporation (IFC), part of the World Bank Group. It aimed to create viable investment vehicles that could be used to simultaneously combat climate change and promote sustainable growth in developing countries. Bill Lockyer, California State Treasurer and Ken Lay, World Bank Treasurer, were both at the P8 Summit. California is buying the World Bank’s second issue of green bonds and the first to be denominated in U.S. dollars.
The $300m bonds are designed to raise capital for projects that aim to combat climate change. Sweden’sSkandinaviska Enskilda Banken (SEB), which was lead manager for the World Bank’s inaugural €233m bond issuance in Swedish kronor in November last year to satisfy demand from Swedish investors, is acting as sole lead manager for the latest transaction. The World Bank, which is issuing the bonds via the International Bank for Reconstruction and Development (IBRD) will credit the proceeds of the 3-year floating rate note to a special account funding loan disbursements to qualifying “green” projects in its member countries.
Lockyer said: “Buying these green bonds makes financial sense for California. It strengthens our portfolio’s diversity while adding a sound investment with a triple-A rated issuer. And it tells the world that when it comes to battling climate change, California is prepared to contribute not just its policies, but its money, too.” It is expected that other investors from the P8 summit could follow shortly with similar investments. Aled Jones, co-director of HRH Prince of Wales’ Corporate Leaders on Climate Change group, which

co-ordinates the P8, said: “In terms of Washington we made some really good progress with the group in terms of how they will continue to work together and to explore possible ways of scaling their investments through other institutions such as the World Bank.” The P8 group – actually ten pension funds – collectively managing $3 trillion in assets: three from Europe, three from Asia, three from the US and one from Australia, includes the Universities Superannuation Scheme in the UK, ABP, the giant pension plan for Dutch civil servants, as well as CalPERS and CalSTRS, the two largest US pensionfunds, which manage the retirement pots of Californian civil servants and teachers respectively. The International Finance Corporation (IFC), part of the World Bank Group, which hosted the summit, provides investment and advisory services to build the private sector in developing countries.

Aled Jones will be talking about the P8 pensions group at RI’s Clean Investor conference on May 6 in London
Link to Clean Investor programme