Paris-area public transport authority Île-de-France Mobilités announced that it has raised €1 billion in a new green bond offering, the first by a public entity to be issued under the European Green Bond (EuGB) Regulation.

The offering marks continued early uptake of the new EuGB label, following the first €500 million corporate issuance earlier this year by Italian utility company A2A.

Adopted by the EU in November 2023, and taking effect in December 2024, the EuGB regulation was launched by the European Commission to establish a “gold standard” for green bonds, in order to combat greenwashing and advance the sustainable finance market in the EU.

Under the regulation, all proceeds from instruments issued under the new EuGB designation are required to be invested in economic activities that are aligned with the EU Taxonomy, although the rules include a flexibility pocket enabling 15% to be invested in economic activities that comply with the taxonomy requirements, but in sectors that don’t yet have established taxonomy criteria, with issuers clearly explaining where these funds will be allocated.

In addition to the investment rules, companies issuing bonds under the EuGB designation are required to follow strict transparency criteria, including disclosing how the proceeds from the bonds will be used, as well as committing to a green transition plan, and reporting on how the investments contribute to the those plans.

According to Île-de-France Mobilités, the new capital will be used to support sustainable projects related to climate and the environment, including clean public transportation, with the authority working on the development of an extensive low-carbon public transport network to contribute to regional mobility plan to reduce greenhouse gas emissions from transport in the region by 25 to 30% by 2030. Investments are anticipated to include network modernization, electric rolling stock across trains, metros, tram-trains, trams, and deployment of low-emission buses and electric bicycles, as well as supporting infrastructure.

Île-de-France Mobilités reported strong demand for the green bond offering, enabling its largest-ever spread tightening, and one of its largest-ever orderbooks.

Valérie Pécresse, President of the Île-de-France region, and Chair of Île-de-France Mobilités, said:

“The transport system in Île-de-France must play a leading role in tackling the climate challenge, establishing itself as a benchmark for decarbonised mobility by 2030. Being the first public issuer in the world to launch a €1 billion Green Bond under the ‘EuGB’ Standard is both a proud achievement and a testament to the strength of our vision.”

BNP Paribas and Crédit Agricole CIB acted as green co-structuring banks for the issuance of Île-de-France Mobilités’ European Green Bond.

Frederic Zorzi, Global Head of Primary Market, BNP Paribas, said:

“This transaction represents an important step for the green bond market, with the EU Green Bond standard aiming to further best market practice for transparency. By leveraging this structure, Ile-de-France Mobilités is not only looking to advance the decarbonisation of transport infrastructure but also setting the pace for others to follow in sustainable financing.”