Green Covered Bonds: Aufbau grüner Deckungswerte

This briefing by the Climate Bonds Initiative explains the structure and potential of Green Covered Bonds, highlighting their ability to provide low-cost, long-term financing for climate-friendly infrastructure and buildings through a 'Dual Recourse' mechanism.

• Covered Bonds are securities issued exclusively by banks that feature a "Dual Recourse" structure, providing investors with both a claim on a pool of designated cover assets and a general claim against the issuer. This structure typically results in higher credit ratings and lower financing costs compared to unsecured debt.
• The first Green Covered Bond in Germany was issued by Berlin Hyp in May 2015 as a 'Grüner Pfandbrief' with a nominal value of EUR 500 million (USD 545 million). The bond had a seven-year term, a 0.125% interest rate, and was four times oversubscribed, attracting 15 new investors. Its cover pool consisted of mortgages for buildings certified as green buildings located in Germany, France, the United Kingdom, the Netherlands, and Poland.
• In November 2016, the Bank of China issued a USD 500 million "Dual Recourse" Green Bond. While not technically a 'covered' bond due to a lack of corresponding laws, it was the first of its kind because of its structure and the fact that its cover assets were composed of Chinese climate bonds on the bank's balance sheet.
• Covered Bonds receive preferential regulatory treatment, which lowers their risk profile. Under Basel III liquidity coverage ratios, they are classified as high-liquid assets, and under the Solvency II directive, they have a low risk spread. Additionally, recent EU regulations exempt them from 'Bail-In' and assign them a low risk weighting.
• To expand the Green Covered Bond market, the document suggests identifying green assets within existing cover pools—particularly mortgage covered bonds, which make up the largest share of the market—and utilizing the Climate Bonds Standard's "2-Degree Pathway" to identify eligible loans in the public sector, shipping, and aviation.

APA

Climate Bonds Initiative (2017). Green Covered Bonds: Aufbau grüner Deckungswerte. https://www.climatebonds.net/files/documents/publications/2d1b2169-86db-4ce9-b0e3-ecc090b7626d.pdf

Chicago

Climate Bonds Initiative. Green Covered Bonds: Aufbau grüner Deckungswerte. 2017. https://www.climatebonds.net/files/documents/publications/2d1b2169-86db-4ce9-b0e3-ecc090b7626d.pdf.

Wikipedia

{{cite report |author=Climate Bonds Initiative |title=Green Covered Bonds: Aufbau grüner Deckungswerte |date=February 2017 |url=https://www.climatebonds.net/files/documents/publications/2d1b2169-86db-4ce9-b0e3-ecc090b7626d.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatebondsinitiative2017green, author = {{Climate Bonds Initiative}}, title = {{Green Covered Bonds: Aufbau grüner Deckungswerte}}, institution = {Climate Bonds Initiative}, year = {2017}, month = feb, url = {https://www.climatebonds.net/files/documents/publications/2d1b2169-86db-4ce9-b0e3-ecc090b7626d.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }