Perspectives 2019 2020 Public Sector

Citi Perspectives 59 The green, social and sustainability bond market continues to grow in size ($465 billion as of end-2018) and investor interest in green bonds is strong. A significant portion of official agencies (supranationals and ECAs) regularly issue green bonds and this asset class has now become mainstream, with AUM in ESG funds rising 60% from $665 billion in 2012 to $1.05 trillion in 2018. This alone explains the tremendous resource behind sustainable lending and how public sector institutions can raise funds for various climate change and social impact-focused projects. Citi is fully committed to environmental finance and supports the official agency community and public sector borrowers in their efforts to reach their sustainable development goals. We are one of the top underwriters of green bonds, supporting multilaterals and export credit agencies with their issuances, as well as sovereign issuer clients. Citi actively supported the Paris Agreement and is one of the 16 leading global and regional financial institutions which participated in the UN Environment Finance Initiative pilot project to implement the Task Force on Climate-related Financial Disclosures appointed by G20’s Financial Stability Board. Citi continuously works towards its environmental financing target of $100 billion, and had achieved $95.3 billion of this by the end of 2018. Broadening Supply Chains: EPC+ F model One important trend in infrastructure projects is Engineering, Procurement and Construction + Finance (EPC+ F), where public sector tenders are awarded on the basis of EPC contractors bringing financing alongside their technical offering. There are increasing ties between EPC contractors, their sub-contractors, ECAs and financial institutions to bring together the optimal financial structure for public sector buyers. The EPC+ F model is becoming standard for infrastructure, healthcare, transportation and power projects. At the heart of the EPC+ F model lies the growing internationalization of supply chains, especially for large-scale infrastructure projects. For example, a railway project in Africa could attract EPC contractors from Europe, the Middle East or China. While their supply chain could potentially include dozens of different companies providing engineering services or equipment from various geographies as well as another dozen suppliers of rolling stock from around the world. 0 10 20 30 40 50 ADB AfDB EBRD EIB IDBG WBG 2018 2017 2016 2015 2014 2013 2012 2011 Sources: 2018 Joint Report on MDB Climate Finance and Moody’s Investors Service The World Bank is driving the increase in climate finance almost single-handedly (Total MDB climate finance commitment. USD billions, 2018)