AIB raises €650M for low-carbon projects in latest green bond issuance

AIB aims to triple its Climate Action Fund to €30bn by 2030.

The Climate Policy Initiative estimates that the global transition to a low-carbon economy will require an annual investment of about $9trn until 2030. In Ireland, the International Monetary Fund (IMF) estimates this cost at approximately €20bn per annum over the next decade, primarily sourced from the private sector.

AIB has been expanding its green lending activities in a bid to facilitate this transition. Green lending constituted approximately 34% of the bank’s new lending in the first quarter of this year, totalling €12.5bn since 2019.

This week, the bank confirmed the results of the issuance of its sixth green bond, confirming it has raised the targeted €650m.

AIB’s chief executive Colin Hunt said: “Sustainability is at the heart of our Group strategy as we seek to protect our people, our prosperity and our planet from the devastating impact of climate change by reducing our own carbon footprint and supporting our customers to do the same.”

AIB’s Green Bond Framework is aligned with the International Capital Markets Association’s Green Bond Principles.

It stipulates that proceeds from AIB’s green bonds can be used to finance low-carbon and energy-efficient commercial buildings and residential buildings; renewable energy generation; energy storage; electricity transmission systems, and zero-emissions vehicles and supporting infrastructure.

Over the past few years, AIB has raised a combined €4.65bn from the issuance of green bonds, claiming to being the ‘first’ Irish bank to issue a green bond in 2020. Including social bonds, the bank has raised €6.4bn for environmental, social and governance (ESG) purposes.

The green loans backing the bond issuance have contributed to avoiding an estimated 1.6 million tonnes of CO2 equivalent emissions and approximately 138,000 megawatt-hour (MWh) of energy consumption in 2023.

Investor interest and future plans

According to the bank, the green bond attracted investor interest totalling approximately €3.5bn from more than 220 investors.

The lead arranger group for the issuance comprised Goodbody, HSBC, ING, J.P. Morgan, Morgan Stanley and NatWest Markets.

Looking forward, AIB aims to triple its Climate Action Fund to €30bn by 2030 to support the development of green infrastructure.

Hunt added: “Our ambition is that 70% of AIB’s new lending will be green or transition by 2030. And we are making real progress towards achieving that goal through the deployment of our €30bn Climate Action Fund.

“The more green lending we do, the more green capital we can raise as investors are attracted by our strong ESG credentials.

“Green bonds are a key part of the transition finance toolkit as they enable capital to be directed towards key green and transition activities.”

In the first six months of 2023, investors pledged approximately $351bn to green bonds – a record high for the first half of any year, according to LinkLaters.