The city of Berlin will issue the first sustainable bonds worth €750m to finance projects with an impact on the environment and society, it announced yesterday.

The funds raised from the issuance will finance 36 projects listed in the city’s budget for the period 2020-2022, the city’s department of finance said, adding that the issuance will happen shortly.

The projects include, among others, the expansion of an electric bus fleet, lunchtimes in schools free of charge, and support for the programme to make forests in the city resilient against climate change, keeping alive the diversity of tree species.

According to reports, building up the electric bus fleet could cost €38m, €4.6m for city forests and €165m for free school meals.

Half of the projects will have a social impact, whiel the otehr half an environmental impact, with the aim to contribute to at least one of the 17 Sustainable Development Goals (SDGs) of the United Nations, the department of finance added.

The city’s first sustainable bond is being issued in line with the internationally recognised market standards of the International Capital Market Association (ICMA).

ISS ESG has conducted an external assessment as a so-called Second Party Opinion Provider (SPO) to certify the framework.

Investors will know the interest rate on the bonds the day of the placement, which will happen soon, said Daniel Wesener, the finance minister of the government of the city of Berlin, to the newspaper Tagesspiegel.

Wesener added: “The new sustainable bond is another important step towards a sustainable financial policy. Berlin has been investing the funds from the pension reserve in a sustainable stock index since 2017.”

The Berlin Ministry of Finance had developed the sustainability index BENEXX in partnership with okeom research and index provider Solactive to invest pension assets of the state of Berlin – Versorgungsrücklage des Landes Berlin with €823m in total – in funds excluding nuclear and fossil sectors, and the armaments industry.

The plan to issue sustainable bonds is also linked to the city’s sustainable finance strategy. The government of the city of Berlin intends to issue sustainability bonds every two years under a framework assessed by ISS ESG, Tagesspiegel reported.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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