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ManagEnergy is a technical support initiative of the Intelligent Energy - Europe (IEE) programme of the European Commission which aims to assist actors from the public sector and their advisers working on energy efficiency and renewable energy at the local and regional level.

Boosted energy efficiency in Essonne

The pressure is on for municipalities to play their part in global energy transition – but where are the funds to fuel these changes? In France’s Essonne a major infrastructural shift towards boosted energy efficiency has begun... bankrolled by the global capital market.

Great green roots – tapping the money market for an energy efficient Europe

In the Department de l’Essone, Ile-de-France, plans are underway for a public transport renovation, municipal buildings retrofit, and the creation of an entire educational centre for sustainable living and eco-construction. These are only some of the projects in an array of low carbon transport and green building initiatives set in motion by the previous Council of Essonne .

‘Last November we successfully placed the first green and responsible bond of EUR 40 million,’ says Jérôme Guedj, previous Chairman of the General Council of Essonne, ‘We had three goals: Innovative financing that corresponds to our proactive policy on sustainable development; An efficient and secure financing with a fixed rate of 2.08% contributing to a favourable financial debt burden; and the establishment of facilities serving the population and sustainable development.’

Finding Funds

With European energy legislation repeatedly targetting the public sector to lead climate and energy reforms, Essonne’s plans are the kind of endeavour many municipalities aspire to.

Only through rapid energy transition and dramatic CO2 reduction can we secure a prosperous future for the next generation – but the necessary steps are going to cost. According to the International Energy Agency (IEA), investments in low-carbon energy technologies will need to at least double, reaching EUR 450 billion annually by 2020, and then double again by 2030, if the worst effects of climate change are to be avoided.

In some regions of Europe, revolving loan funds have started a cycle of infrastructural upgrading, creating exponential energy-efficiency improvements in a bid to meet European Union (EU) energy goals. But the financial demands of such an endeavour are staggering, and many municipals simply do not have the capital. Crowdfunding has achieved some results, but if Europe’s energy performance is to transform before climate change catches up, new and fertile funding resources need to be tapped... and what richer resource, than the capital markets?

The Essonne green bonds have set in place a promising mechanism for channelling global capital market funds into local green growth.

The rise of the conscientious investor

In recent years, an increasing number of ‘Socially Responsible Investors’ (SRI) have appeared amongst the money men – players who include a broad range of non-economic criteria, including social, environmental and governance, in their investment choices.

Until 2007, ethical finance remained marginal, but by 2009, SRI funds accounted for EUR 50 billion in the French market alone, and it has continued to flourish since. In 2013, the World Bank started to align its environmental loan framework with their capital markets activities and, together with the IFC, came up with a foundation to finance sustainability.

Green bonds are the latest example of themed bonds designated for a specific purpose, making them more attractive to investors. Bonds are tradable debt securities with repayment terms such as maturity, and interest rate contractually set at issuance – in the case of Essonne’s bonds, a 2.083% return is to be repaid over 14.5 years.

The world’s first Green Bond Index was launched in July of last year by the British bank Barclays in conjunction with Morgan Stanley Capital International (MSCI), one of the leading global financial services information providers. Mirova , the ‘responsible investment’ subsidiary of Natixis Asset Management will be the first European fund fully invested in green bonds by the end of the year. At the International Financing Review (IFR)’s Green Bond Roundtable, one estimate of issuance in 2015 was US$ 100 billion and a staggering US$ 160 billion in 2016.

Green for Green

‘We must not forget that the choices of SRI fund shareholders are also guided by a minimum profit motive’ says Frédérique Dejean, SRI specialist and lecturer at the Conservatoire national des arts et métiers (CNAM). Financial studies have revealed that responsible funds are neither more nor less profitable than ‘classic funds,’ leaving them at the very least no less attractive to investors. In terms of the green and environmental markets, there is now an increasingly strong connection between environmental risk and financial performance, and financial risk.

Thanks to excellent financial ratings achieved by its previously socialist-led General Council, Essonne is among the best French authorities rated by Vigeo, which awarded it an overall score of 59/100. One thing that investors have an eye for is green, and Vigeo’s score, along with an AA and AA- rating from Fitch and S&P respectively, is no doubt a selling point for its recent green bond. Contributors to the bonds included two French investors and an international investor.


For a green bond to differ in any meaningful way from any other bond, it must be subject to a monitoring system to track whether the funds raised have indeed enabled the initiatives expected to be financed. Some issuers, like Essonne, undertake to provide annual reporting on the allocation of funds until the entire amount of the issue has been invested.

To create its green bond, Essonne was assisted by Vigeo in the development of reporting criteria to show how effective the project is in achieving modal shift. Consequently, the bond has one of the highest levels of transparency in the industry.

What now?

For Essone, the socialist-led Council who issued the bonds are no longer the people who will be managing the funds – so what is to become of their hard work, and the promises they made to their investors?

At the time of bond issuance the General Council set up a binding agreement to submit annual financial monitoring indicators, environmental and social, of all bond-funded projects and their governance. This report is to present, for example, the result of consultations between the various partners and stakeholders involved in these operations, or the results of social integration clauses in terms of hours executed.

So far so good – the new Council has been in power for some months now, and thetransit development project for the business park Plateau de Saclay is going strong, with the creation of green routes already underway. In recent months the upper part of the road bridge of the Grand Pole in Juvisy-sur-Orge has seen the renovation as part of an overall refurbishment aimed at making public transport an affordable and convenient option for citizens of Essone. The project will see the creation of a new T7 tram terminus station, a new passenger building, bike parks, and direct access to the RER D. The expansion and restructuring of a secondary school,College Charles Peguy Morsang-sur-Orge is still set to take place, as well as the construction of “City Val Verde” educational centre for information on sustainable living and eco-construction in Plessis Pâté. The funds will also be used for municipal building retrofits and the construction of a retirement home in Les Ulis.

Game-changing tools?

Supported by the consciences and image-awareness of investors, green bonds are offering municipalities one way of tapping the global capital markets to power local green growth. But whether the method is the key to surviving the energy crisis remains to be seen. Many consider SRI and green bonds game-changing tools for energy transition. Others, like CDC Climat , believe green bonds are too vulnerable to confused objectives, greenwashing, and changes of governance.

Only time will tell whether a change to the Departmental Council will alter the execution of the Essone green bond’s promised objectives – but so far the department looks set for effective energy transitions, bankrolled by the global money market.

Further Information

Learn more about green bonds at by visiting the Climate Bonds Initiative website.

To encourage firms to react against climate change, 385 institutional investors have formed the Carbon Disclosure Project .

For more on SRI see Responsible funds are neither more nor less profitable ; The advance of responsible shareholders