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28 September 2023

Green federal securities

Climate action is a priority. The German government has been issuing Green German Federal securities since 2020 to boost sustainability in financial markets, too.

These bonds are also referred to as “green twins”, because they have the same characteristics as conventional federal securities. The difference is that they have budget expenditures for climate action, environmental protection and nature conservation assigned to them.

Green fed­er­al se­cu­ri­ties BildVergroessern
Source:  Federal Ministry of Finance

Green Bond Framework

The use of proceeds from Green German Federal Securities always corresponds to federal expenditure from the previous year. Spending from the previous year’s budget that qualifies as “green” is assigned to the securities. The Green Bond Framework lists five main green expenditure categories that can be assigned to Green German Federal Securities. These are:

  1. Transport
  2. International cooperation
  3. Research, innovation and awareness raising
  4. Energy and industry
  5. Agriculture, forestry natural landscapes and biodiversity

By specifying these categories, the framework creates transparency regarding green expenditures and their impact. The Green Bond Framework is available for download at https://www.deutsche-finanzagentur.de/fileadmin/user_upload/institutionelle-investoren/pdf/GreenBondFramework.pdf.

German government publishes the impact report for German green bonds issued in 2021

On 28 September 2023, the German government published the impact report for the Green German Federal securities that were issued in 2021. The “Green bond impact report 2021” provides investors with transparent and reliable information about the impact on the climate, environment and nature of green expenditures from budget year 2020 that were allocated to the proceeds of the Green German Federal securities issued in 2021.

In 2021, the German government issued Green German Federal securities with a total volume of €12.5bn. In the 2021 allocation report, around €13.4bn in eligible green expenditures from budget year 2020 were allocated to the proceeds from these securities.

The new impact report shows the contributions that the green expenditures are making to climate protection, climate change adaptation, mitigating environmental pollution, and protecting biodiversity and ecosystems.

German government publishes “Green bond allocation report 2022”

On 30 March 2023, the German government published the allocation report for Green German Federal securities that were issued in 2022. The “Green bond allocation report 2022” provides investors with transparent and reliable information about federal budget expenditures incurred in 2021 in the areas of climate action, environmental protection and nature conservation that qualify as green and that were allocated to the proceeds of Green German Federal Securities issued in 2022.

The German government issued Green German Federal securities worth €14.5bn in 2022. The issuance volume thus increased for the second year in a row (following a rise from €11.5bn in 2020 to €12.5bn in 2021). At the end of 2022, a total volume of €38.5bn of Green German Federal securities was in circulation. In a short space of time, Germany has become the second largest issuer of green euro bonds.

The allocation of proceeds to green expenditures underwent third party verification.