The European Commission plans to issue green bonds for the first time, media reports said. The plan comes on the backdrop of a €750 billion borrowing from the international financial market. It is reported that the funds will be considered as sustainable debt which will drive Europe’s Covid-19 recovery fast.
Johannes Hahn, commissioner for the EU budget, told the media, Brussels was exploring the possibility” of selling sustainable bonds as part of an unprecedented debt-raising exercise that is expected to begin early next year. The commission is exploring the possibility to issue part of its bonds in formats that demonstrate its commitment to sustainable finance — including social and or green bonds.”
The €750 billion borrowing deal with the international finance market was carried out in July. The funds will be used to fund a Next Generation EU project that will issue grants and loans to assist member states recover from the pandemic loss. The commission will also add an additional €150 billion for the government unemployment insurance schemes.
It is reported that green bonds are the best ways to drive financial infusion for green developments as many countries are focusing more on green bonds. Green bonds worth $263 billion were sold in 2019, higher than $1 billion in the last decade.
According to Thomas Buberl, chief executive of French insurer Axa, €200 billion should be green bonds out of €750 billion. The move will allow EU leaders to utilise 30 percent of the recovery fund on sustainable and low-carbon investment.