Zurich Insurance to Double Green Bonds to $2 Billion on European Growth

By Carolyn Bandel | July 14, 2014

Zurich Insurance Group AG, Switzerland’s largest insurer, doubled its planned investment in green bonds, citing their growing appeal in Europe.

The company said in November that it wanted to invest as much as $1 billion in debt issued by the World Bank and other development institutions to fund projects that meet environmental criteria. It now plans to allocate as much as $2 billion for green bonds, the Zurich-based insurer said in an e- mailed statement today.

“Green bonds are a great example of an investment that allows us to have a positive impact on society and the environment, while meeting our financial criteria,” Chief Investment Officer Cecilia Reyes said in the statement.

Unilever NV and Unibail-Rodamco SE are among European companies that issued their first green bonds this year. So far in 2014, Europe has seen 24 such sales–14 in Sweden and the rest in Britain, France, Italy, the Netherlands, according to data compiled by Bloomberg. That compares with 16 in 2013 and four in 2012.

Governments from the U.S. to China have championed the bonds as a way to fight climate change. Other investors snapping them up include Nordea Bank and Blackrock Inc. The securities offer returns and risk levels comparable to traditional debt of the same maturity and rating.

With more than $16.6 billion issued worldwide this year, 2014 is on track to surpass $40 billion in green bonds, according to a June 2 report by Bloomberg New Energy Finance. That would be triple the volume issued in 2013.

Terracotta Army
The World Bank introduced investors to green bonds in 2008 and has since raised about $6.3 billion from such debt, according to its website. In March, it raised €550 million ($749 million) from a three-year bond, which it says was its first in the European common currency.

It uses the money to fund a wide range of projects around the world, including one to reduce carbon emissions from transport in the Chinese city of Xi’an, which every year receives millions of visitors who come to see its ancient terracotta sculptures of soldiers.

Other issuers include governments and corporations.

Zurich Insurance said it has invested $400 million in green bonds so far. If it reaches $2 billion, its commitment would still only account for 1 percent of its $200 billion in assets.

 

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