Called the Green Cornerstone Bond Fund, its objective is to develop green finance in emerging markets, buying green bonds issued in Africa, Asia, the Middle East, Eastern Europe and Central Asia.
The IFC has committed to investing up to $325m in the new green fund, while Amundi has confirmed it will raise over $2bn from institutional investors worldwide.
Thus far, the IFC has issued green bonds totalling $5.8bn in 12 different currencies. This latest green bond fund will bring the investment manager one step closer to increasing its own climate investments to 28% by 2020.
The fund will initially target emerging market countries and banks that have a higher potential to issue green bonds, with the goal of being fully invested in green bonds within seven years.
“This green-bond fund will lower the risk for the private sector and attract new investors – essentially creating a market where there was none,” said IFC CEO Philippe Le Houérou.
“We’ve already identified dozens of banks in many developing countries around the world that could be interested in this fund. It’s a win-win—supporting the green economy and deepening access to international markets for emerging market issuers.”
In an effort to lower risk and mobilize private sector financing, IFC has agreed to provide first-loss coverage so that the fund can operate in the more challenging, conflict-torn economies.
Amundi’s chairman Xavier Musca said the “innovative partnership with IFC” is a major achievement for Amundi and its parent company Credit Agricole Group.
“I consider this project as a game changer: it is both an investment opportunity for institutional investors and it will have an impact on society by accelerating the shift of emerging markets toward a green economy,” Musca stated.
