France to issue first green bonds in January

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The French government has announced it expects to issue its first green bonds before the end of January 2017 in order to start funding environmental projects.

Ségolène Royal and Michel Sapin, respectively minister of Environment and minister of Finance, have unveiled details on the forthcoming issuance.

Sapin said that the total valuation of further French green bonds issued will reach billions of euros, contrary to Poland, which became last December the first European country to issue green bonds but intends to issue €750m of green bonds over five years.

Sapin added that the French authorities consider a starting “benchmark” operation, meaning that at least €2.5bn of green bonds with a maturity of 15 to 25 years would be issued by the French government through the Agence France Trésor (AFT), which manages French government debt and treasury.

The first issuance will done through a syndicate of banks selected by the AFT.

Last October, Philippe Zaouati, CEO of Mirova, an SRI-focused boutique owned by Natixis Asset Management, shared his view on green bonds with InvestmentEurope, that public institutions and private actors across the world are finding a consensus around green bonds.

“Banks are already involved in green finance as 60% of the infrastructure projects they invest in are labelled green. But green bonds’ issuances do not develop as fast as it should be on the corporate side. We stress two types of companies.

“On the one hand, firms have lots of green assets and they assess the adding cost, even though marginal for them, of issuing a green bond is not worth it. On the other hand, issuers have a very few green assets. Large industrial firms enter into that scope as they struggle to cope with energy efficiency. For some, a reputational brake exists. If oil companies issue green bonds, it might be seen as green washing,” he highlighted.

Zaouati also said that there must be advantages to issue green bonds, some sort of incitations in regulation and fiscality.

“If you exclude green bonds from the scope of the financial transaction tax, the amount of issuers interested will clearly increase,” he added.