NOVEMBER 28, 2018 —The World Bank (International Bank for Reconstruction and Development; IBRD) has raised more than US$660 million in Sustainable Development Bonds highlighting the critical role of ocean and water resources.
Specifically, the World Bank focused on two Sustainable Development Goals (SDGs): SDG 14 (life below water) and SDG 6 (clean water and sanitation).
A range of institutional and retail investors globally have supported the initiative since it was launched in August.
The IBRD is an international financial institution that offers loans to middle-income developing countries. It is the first of five member institutions that compose the World Bank Group, and is headquartered in Washington, D.C., United States.
Ten bonds in five currencies have been issued under the initiative to date, with tenors ranging from two to 43 years. Investors all voiced strong support for the strategic focus on SDG 14 and SDG 6.
The World Bank says it will continue to issue bonds under the initiative as part of a strategic effort to highlight SDG 14 and SDG 6.
Freshwater and marine ecosystems cover more than three-quarters of the earth’s surface and provide critical services—from habitats and drinking water, to contributing to climate control, while also providing nutrition, jobs and livelihoods.
The World Bank, as the biggest multilateral funder for ocean and water projects in developing countries, is committed to working with countries to ensure access to safe and clean water and for the sustainable use of ocean and marine resources.
This includes avoiding pollution reaching oceans through better waste management.
“As maintaining precious fresh and salt water resources is complex and challenging, governments must catalyze the private sector to develop innovative solutions. We are therefore delighted with the diverse range of investors that have purchased our bond series and appreciate the commitment of all stakeholders to new approaches to ensuring better stewardship of our fresh water and ocean resources,” said Arunma Oteh, World Bank Vice President and Treasurer.
The World Bank has US$37 billion in water-related investments and an oceans-related portfolio of more than $4 billion—including more than $550 million in projects that contribute to reducing marine pollution in countries such as the Philippines and Indonesia.
The World Bank is also supporting countries as they help make their coastal communities more resilient, often in the face of dramatically shrinking coastlines; while also focusing on improving fisheries management in all regions where the Bank works.
Examples of water and ocean projects
In India, a World Bank project has mapped the entire coastline to better manage coastal space and minimize vulnerabilities through shoreline protection and land use plans. So far, 1.7 million people have benefitted from the programme, with nearly half of them women, and 16,500 hectares of mangroves have been planted.
Sewage treatment plants for about 1 million people are helping to prevent the flow of more than 80 million liters of untreated sewage into the ocean per day and to protect over 400 km of coastline.
In Indonesia, where two-thirds of coral reefs are considered threatened by overfishing, a coral reef project has benefited 358 village communities by establishing marine protected areas and reducing illegal and destructive fishing.
The project aims to increase communities’ income by 15 percent and improve coral reef health in at least 70 percent of project sites by 2019.
In Romania, a pollution control project is reducing the discharge of nutrients into water bodies leading to the Danube River and Black Sea.
Over 100 communes have benefited from support under the first phase of the project, 11 sewerage systems and communal wastewater treatment plants were built, seedlings were planted on 182 hectares in 57 communities, and the first pilot plant was built for biogas production from manure.
Over the past decade, water quality and ecosystem improvements been observed in the Danube River/Black Sea basin due to this project.
The Panama Metro Water and Sanitation Improvement Project helped improved the quality of water service for 80,382 beneficiaries in Colón and provided the National Water and Sewer Agency with a replicable model, using performance-based contracts, for effectively piloting and implementing new methods of doing business.
The project increased water supply continuity from 13 per cent in 2014 to 71 percent in 2017.
“Water is the driver of nature. We at SPP Storebrand welcome IBRD’s effort to issue a bond which highlights the critical water topic. In the coming years, we need to scale up investments in infrastructure related to water tremendously. Raising awareness is a welcomed first step,” said Helena Lindahl, Senior Portfolio Manager at Storebrand.
“The decision of the World Bank to launch an initiative to raise awareness for the health of oceans and urgent need for clean water through their sustainable development bond issues, is very much welcomed by investors. We see increased interest from our investors to understand risks around water management and the need to protect oceans. Engaging with the World Bank and others around this topic is extremely helpful,” said Christopher Flensborg, Head of Climate & Sustainable Finance at SEB.
Sydbank Senior PM EM Debt- Jens Erik Skak Boesen said: “Sustainability is clearly becoming an ever more important topic, also among the investment community. We welcome and support the World Bank’s clean water initiatives.”
“The debut water bond in Kazakhstan tenge by one of our preferred SSA-issuers, the World Bank, enables us to ensure sustainability in local currency investing at highly competitive rates,” said Lutz Roehmeyer, CIO and founder of Capitulum Asset Management.
Senior PM Fixed Income at Swiss Life Asset Managers, Frank Nieresel, said: “We welcome very much this opportunity for a responsible investment into World Bank bonds. It also underlines our commitment to sustainable considerations in our active risk management approach and investment decision making.”
“We are seeing an ever-growing demand from our investors on Sustainability Bonds across currencies and tenors and JPM is proud to be working alongside the World Bank in this capacity” said Amélie Darrort, Co-Head of EMTN Desk at J.P. Morgan.