Japanese investors purchase World Bank sustainable development bond

20 / 09 / 2022

By Marwa Nassar - -

A group of Japanese investors purchased the World Bank Sustainable Development Bond at AUD 315 million to support the bank’s approach to biodiversity and natural ecosystem services while pursuing poverty eradication and shared prosperity sustainably in client countries.

Institutional investors participating in the transaction included Fukoku Mutual Life Insurance Company and Meiji Yasuda Life Insurance Company.

Jorge Familiar, Vice President and Treasurer, World Bank, said “Investors have been increasingly integrating sustainability criteria in investment decisions, and biodiversity has become a focus. We are grateful to Japanese investors for coming together to show their support for the World Bank’s efforts to help member countries improve biodiversity and protect ecosystem services as part of their strategies for growing their economies and building resilience for the future.”

Juergen Voegele, Vice President for Sustainable Development, World Bank, said, “The rapid decline in biodiversity and ecosystem degradation has enormous development, economic, and financial costs. We cannot overstate the importance of mobilizing more funding, and particularly private finance, to reverse this loss. Instruments like Sustainable Development Bonds support the financing that helps fill the funding gap required to scale up nature-positive investments, while also paving the way for a greener financial sector that protects nature.”

Biodiversity is critical to sustainable development, climate resilience, and human well-being. Animal, plant, and marine biodiversity comprise the “natural capital” that keeps our ecosystems functional and economies productive. Half of the world’s GDP depends on biodiversity and ecosystem services which include things like fresh water and timber, carbon storage and sequestration, natural landscapes that support tourism, and soil formation. With a steep decline in natural capital in the last 50 years, at least one million species are threatened with extinction. An estimated US$700 billion/year is needed to reverse the loss of biodiversity and ecosystem services by 2030.

Takehiko Watabe, Director and Managing Executive Officer, Fukoku Mutual Life Insurance Company, said “Fukoku Life is actively engaged in ESG investments under our business policy of ‘contributing to the realization of a sustainable society as a mutual life insurance company.’ We believe that this investment highlighting our support for biodiversity conservation helps us not only achieve a financial benefit, but also allows us to contribute to addressing climate change and ocean pollution and aligns with the “long-term sustainability” we seek. Fukoku Life will continue to strive to be an organization that promotes true mutual aid based on the concept of THE MUTUAL.”

Masao Aratani, Director, Deputy President Executive Officer, the Investment Division, Meiji Yasuda Life Insurance Company, said, “Considering that biodiversity loss has become a global issue, we have positioned ‘conservation of biodiversity (addressing the risks of nature loss)’ as a priority issue. In line with this, efforts are now under way to step up our relevant initiatives. We decided to invest in this bond to show support for the World Bank’s efforts on biodiversity and natural ecosystem conservation. Through ESG investments, we promote the creation of social value by addressing global environmental and social issues and contributing to local communities including through the revitalization of domestic local economy, in line with our management philosophy, ‘Peace of Mind, Forever.’ As a responsible institutional investor, we will continue to manage our assets contributing to social sustainability.”

Citigroup Global Markets Japan Inc. and Morgan Stanley MUFG Securities jointly acted as the bond arrangers. The 10-year bond was issued under the World Bank’s Sustainable Development Bond Framework.

Elree Winnett Seelig, Global Head, ESG, Markets, Citi, said, “We are proud to have collaborated with the World Bank and Japan’s leading institutional investors on the first Sustainable Development Bond engaging investors on the topic of biodiversity. Biodiversity is declining at a faster rate than any time in human history. The World Bank’s leadership in addressing the causes of biodiversity loss and its investment in landscape scale restoration complement our objectives, as well as those of our clients.”

Cristina Lacaci, Global Head of ESG Structuring, Global Capital Markets, Morgan Stanley, said “Morgan Stanley is proud to have worked with the World Bank, along with their Japanese institutional investors, on this transaction raising awareness for biodiversity conservation. The World Bank’s Sustainable Development Bonds are supporting critical financing of sustainable projects in developing markets, and we look forward to continuing to support their sustainability efforts.”