London Stock Exchange welcomes world first bond to protect forests and deepen carbon-credit markets

London Stock Exchange welcomes world first bond to protect forests and deepen carbon-credit markets

  • $152m IFC bond offers investors repayment in carbon credits
  • Carbon credits will support UN Reducing Emissions from Deforestation and Forest Degradation scheme in Kenya
  • Listing demonstrates London’s unmatched status as centre for sustainable finance and innovation

London Stock Exchange today welcomes a first-of-its-kind bond, issued by the IFC - part of the World Bank Group - that gives investors the unique option of being repaid in either carbon credits or cash. Listed in London, the five year, 1.546 per cent coupon bond raised $152m from a wide range of international investors, to support private sector development and prevent deforestation in developing countries.

Nikhil Rathi Chief Executive Officer, London Stock Exchange plc said: 

“As global investor attention increasingly turns towards more sustainable and environmentally focussed assets, there is a pressing need for financial innovation to help channel and support the redeployment of capital towards these ends.

“That’s why today’s IFC listing is so important and the choice of London as a listing venue so telling. Developing London as a leading international hub for green finance is vitally important to the city and a key driver behind the launch of our dedicated Global Sustainable Investment Centre this week. Today’s listing is an important step in our mission to create in London, the most climate–aligned investment environment in the world.”

Jingdong Hua, IFC Vice President and Treasurer said:

“Halting deforestation is essential to meet the global community’s climate goals. To do that, we need to mobilize $75 billion to $300 billion in the next decade. Much of this needs to come from the private sector. IFC’s Forests Bond demonstrates the power of innovative capital-market mechanisms to unlock private sector funds for forest protection.”

Fiona Wild, BHP Billiton Vice President Sustainability and Climate Change said:

“The Forests Bond will direct investment for the benefit of the climate, forests and communities and creates a financial incentive for preventing deforestation and investing in low-carbon development. Our support for the Bond is part of our commitment to scale-up private sector investment in REDD+, stimulate demand for REDD+ credits and demonstrate the value of reducing deforestation as one of the most cost-effective climate change solutions.”

London Stock Exchange Group is a pioneer in supporting the growing global green and sustainable financing movement, providing a comprehensive green and sustainable product offering.

  • 39 green bonds issued by international institutions, municipalities and corporates are listed on London Stock Exchange in 7 currencies, having raised $10 billion
  • In 2016 alone, 13 new green bonds in 5 different currencies have raised approximately $4.59 billion
  • In 2015, LSEG launched dedicated Green Bond Segments across its fixed income markets, offering a flexible range of market models, open to retail and wholesale investors
  • On Monday, 7 November FTSE Russell, the global index provider, announced the creation of a new index, the FTSE All-World Ex CW Climate Balanced Factor Index, the first to combine a smart beta factor approach alongside climate change considerations
  • The index has been chosen by Legal & General Investment Management for its new Future World Fund, which HSBC Bank UK Pension Scheme has selected for its equity default option, worth £1.85 billion, in its DC scheme.
  • There are 38 ‘green companies’ which have raised $10 billion combined in London including, 14 renewable investment funds
  • London Stock Exchange is home to a number of global first green bond issuances from India’s Axis Bank, China’s Agricultural Bank of China, Japan’s  Development Bank of Japan and the IFC, a member of the world bank group
  • LSEG is a member of the UN Sustainable Stock Exchange initiative

Further information can be found online at our Global Sustainable Investment Centre

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About the IFC Forests Bond:

Investors in the bond were offered a choice between a cash or carbon-credit coupon, a tradable certificate or permit representing the right to emit one ton of carbon dioxide or other greenhouse gasse. Investors choosing the carbon credit coupon can retire the credits to offset corporate greenhouse gas emissions, or sell them on the global carbon market.

To pay investors a carbon credit coupon, IFC will buy carbon credits from a project that follows the United Nations Reducing Emissions from Deforestation and Forest Degradation (REDD) scheme in the Kasigau Corridor project in Kenya.

IFC developed the Forests Bond with BHP Billiton and Conservation International. BHP Billiton is a global mining, metals, and petroleum company. Conservation International is a global non profit environmental organization.

For further information:

Tom Gilbert +44 (0)20 7797 1222

Notes to editors:

*Green bonds are classified as any type of bond instrument where the proceeds of the capital raised will be exclusively applied to finance or re-finance, in part or in full, new and/or existing ‘green’ projects.

About London Stock Exchange Group:

London Stock Exchange Group (LSE.L) is an international markets infrastructure business. Its diversified global business focuses on capital formation, intellectual property and risk and balance sheet management. LSEG operates an open access model, offering choice and partnership to customers across all of its businesses. The Group can trace its history back to 1698.

The Group operates a broad range of international equity, ETF, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS (Europe's leading fixed income market); and Turquoise (a pan-European equities MTF). Through its platforms, LSEG offers market participants, including retail investors, institutions and SMEs unrivalled access to Europe’s capital markets. The Group also plays a vital economic and social role, enabling companies to access funds for growth and development.

Through FTSE Russell, the Group is a global leader in financial indexing, benchmarking and analytic services with approximately $10 trillion benchmarked to its indexes. The Group also provides customers with an extensive range of real time and reference data products, including SEDOL, UnaVista, XTF and RNS.

Post trade and risk management services are a significant part of the Group’s business operations. In addition to majority ownership of LCH, a multi-asset global CCP operator, LSEG owns CC&G, the Italian clearing house; Monte Titoli, a leading European custody and settlement business; and globeSettle, the Group’s CSD based in Luxembourg.

LSEG is a leading developer and operator of high performance technology solutions, including trading, market surveillance and post trade systems for over 40 organisations and exchanges, including the Group’s own markets. Additional services include network connectivity, hosting and quality assurance testing. MillenniumIT, GATElab and Exactpro are among the Group’s technology companies.

Headquartered in the United Kingdom, with significant operations in North America, Italy, France and Sri Lanka, the Group employs approximately 3,500 people.

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