Asia | October 21, 2018

First green bond in Taiwan dollars to fund island’s clean energy shift

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, October 22 – French bank Societe Generale has issued a TW$1.6 billion ($51.7 million) green bond, backed by local insurers, securities firms, banks, and other financial institutions in Taiwan. It is the first green bond to be denominated in Taiwan dollars and the first to be issued by a foreign bank on the island.

A total of $389 billion in green bonds have been issued worldwide—part of the larger $1.5 trillion climate bond universe. Three quarters of green bonds have been issued in just three currencies: U.S. dollars, euros and Chinese yuan. So far, most “local currency” issuances have been initiated by development banks, rather than the private sector.

Societe Generale’s bond, issued in three tranches, will be used to fund renewable energy projects in Taiwan, including the island’s first commercial scale, off-shore wind farm: the 120-megawatt Formosa 1 project.

Taiwan is looking to increase its share of renewables-based power generation from 5% today to 20% by 2025, and hopes to unlock $59 billion in private capital to achieve that goal. Taiwan’s regulatory body, Financial Supervisory Commission, approved the island’s first green bond in May last year as one avenue to catalyzing private capital.

Already the Taiwanese green bond market has been marred by “greenwashing” claims. State-owned Taiwan Power Co. sought to raise $271 million in “green financing” to upgrade coal and gas power stations, the Wall Street Journal reported. Such bonds are screened out of green and climate bond totals by tracking groups like the Climate Bonds Initiative.

Societe Generale says its Taiwan dollar-denominated bond is aligned with the U.N. Environmental Program impact finance principles. It is part of the bank’s goal of raising €100 billion ($115 billion) to “finance the energy transition” by 2020. The company states it is halfway to that goal.