Right at a moment when international climate
efforts were concentrated at COP21 taking place in Paris in 2015, the city
issued the Paris Climate Bond (PCB)1 to finance and re-finance projects in climate mitigation
and adaptation. The PCB constitutes an innovative tool to reach the goals of
the city of Paris´ ambitious Climate Action Plan, which aims to make Paris a
carbon-neutral and climate-resilient city by 2050. It functions in line with
the ‘Green Bond Principles’, which are voluntary process guidelines that
recommend transparency and disclosure and promote integrity in the development
of the green bond market (ICMA, 2018). The bond has a size of EUR 300 million,
a term from 2015 to 2031, and targets private investors who are interested in
seizing this investment opportunity while funding sustainable actions in the
city of Paris. Investors receive a coupon of 1.75% per year (ClimateADAPT, 2016).
The Paris Climate Bond aims to fulfil four main goals: Greenhouse gas (GHG)
emission reductions, improvement of energy efficiency, renewable energy
production, and climate change adaptation (Climate Bonds Initiative, 2015;
ClimateADAPT, 2016).

The case constitutes a good practice for a variety
of reasons: The city of Paris has involved different knowledgeable stakeholders
to secure a well-informed implementation of the bond. In addition, the political
will to push for ambitious climate policies in Paris has been continuously
strong, which helped to foster its burgeoning green bond market. Lastly, a
transparent reporting structure has attracted investors as they can easily
assess the impacts of their investments.