Capital Markets Program

A green bond is a debt instrument used by institutions to raise funds in order to finance projects focused on combating climate change and promoting environmental sustainability. It is a financial tool that is increasing in significance internationally, as governments and companies seek to address the environmental issues the world is facing today.

The issuance of a green bond is a natural continuation of PIF’s mandate, given the central importance of sustainability for the Fund. As Saudi Arabia has the ambition to diversify its economy, PIF is enabling this transformation through various projects and investments. The Fund has recognized that an effective tool to aid in this process is green financing to support its eligible green projects.

PIF’s objectives to establish a capital market program has been realized through this bond issuance. PIF is well-capitalized with a strong balance sheet and ample liquidity to support its investment mandate and existing capital commitments in KSA and globally. Borrowing and debt instruments represent one of the four sources of funding available to PIF, ensuring flexibility and ability to finance activity over the long-term.

The issuance will enable PIF to access a wider range of investors including those considering environmental and social as well as governance criteria within their investment decision-making process. It will also allow investors to diversify their portfolio of green investments, thereby potentially accelerating a virtuous circle of sustainable investments globally.

As per PIF’s Green Finance Framework, proceeds from the green bond issuance will be allocated to finance/refinance PIF’s eligible green projects across Saudi Arabia, including green buildings, renewable energy, energy efficiency, sustainable water management and other initiatives. Giga-projects such as NEOM, Amaala, and The Red Sea Development Company show large amounts of projects eligible for financing that will help transform the Kingdom’s economy.

PIF has taken significant steps in terms of governance and policies to contribute to sustainability. The Fund is a founding member of the One Planet SWF Initiative, an international platform that looks to accelerate efforts to integrate financial risks and opportunities related to climate change in the management of large, long-term asset pools. As an investment fund, PIF acts by acquiring stakes in companies that fit its mandate, e.g. ACWA Power and Lucid, and has established the Saudi Investment Recycling Company (SIRC), active in managing different waste types, and manages The National Energy Services Company (Tarshid). PIF is supporting the establishment of the MENA Voluntary Carbon Market to facilitate trading of carbon credits in the region.

The issuance will finance tangible projects on the ground. This will further accelerate the green transition and help reach key country-level objectives, including reaching net zero by 2060 and the 50% target for renewable energy in the energy mix by 2030 where PIF is responsible for developing 70% of the Kingdom’s renewable energy targets for the Kingdom by 2030.