Last week, Malta’s financial markets marked an important historical milestone with the very first issuance of a green bond.

Following some years since the setting up of the Malta Stock Exchange Green Bond Framework, the Water Services Corporation successfully issued the first-ever 10-year green bond on the market.

This first-mover initiative was met by strong support from local investors as the issue was very rapidly oversubscribed in a matter of hours. This illustrates the strong confidence of domestic investors in green projects that can yield good financial returns together with positive environmental progress.

This is because the proceeds of these bonds will fund projects with significant positive environmental impact. This includes the development of a new reverse osmosis plant, solar farms and wastewater-treatment efficiency enhancements. These are typical investments that are synchronised with the UN Sustainable Development Goals, guiding Malta’s transition towards a sustainable economic model.

I have always been a strong proponent of these investment vehicles. I have to say that too often I was met by resistance from practitioners. Resistance which was often fuelled by nothing but fear from innovation and the inertia of bringing the much-needed positive change in the way we operate across sectors and industries.

For too long, the investment market has been heavily reliant on the traditional property-related bonds. This green bond pushes investors out of their comfort zone and is testament to the fact that going green generates returns.

This first green bond issuance has shown everyone that finding capital for green projects is indeed possible and this can be done without paying a higher risk premium of sorts. The green financial plumbing is in place and demand for green projects has proven to be very strong.

I am very confident that this first-mover initiative will instigate many other issuers in the private sector to tap this market. This will be pivotal for our companies to transition their business models towards greener and more competitive ones. In turn, this can truly drive the transition of our economic model.

By aligning financial strategies with environmentally friendly practices, Malta can enhance its international reputation as a responsible and forward-thinking nation

This success story can lead to something even bigger. In a post-greylisting environment, Malta has the potential to become a regional green finance leader by creating an ecosystem which supports the issuance of green financial instruments by local and also international players.

We can build on the expertise garnered by local practitioners in the last three decades to change our financial market proposition, away from traditional back-office operations to an avant-garde green jurisdiction of excellence in the Mediterranean. By demonstrating the tangible economic and environmental benefits of green bonds, Malta can ignite a ripple effect, encouraging neighbouring countries to fund and implement green projects in the region.

Leveraging its substantial financial resources, including €24 billion already in Maltese deposit accounts, Malta can proactively direct these funds towards projects that promote sustainability. This would position Malta at the forefront of the green finance movement, aligning with the broader objectives of the European Green Deal.

Malta’s dedication to green finance will not only strengthen its economy and environmental conservation efforts but elevate its status as a leader in global sustainable development. By aligning financial strategies with environmentally friendly practices, Malta can enhance its international reputation as a responsible and forward-thinking nation, attracting international attention and investment, and thereby strengthening its economic position.

To complement the European Green Deal’s objectives, Malta should implement policy measures to incentivise green capital flow. Providing tax credits on interest paid on green bonds and offering faster depreciation of green assets can attract investors and promote sustainable financing. Policies that support the flow of private capital towards green projects can accelerate sustainability efforts and tilt the balance towards greener investments.

Malta’s first-ever green bond issuance marks the beginning of a transformative journey towards a greener, more sustainable future. By prioritising green projects and embracing responsible investment practices, Malta sets the stage for future generations to inherit a healthier planet and a thriving economy.

Let us be a beacon of hope for a brighter, sustainable future by directing capital towards green ventures and protecting our planet for the well-being of all. With this pioneering effort, Malta is spearheading a sustainable economic model that can inspire and lead the way for others to follow.

Steve Ellul is a financial analyst.