The Netherlands said it was issuing its first green bond on May 21, becoming the first top-rated country to tap into a growing market for investments in environmental projects.

It is aiming to raise €4-6 billion up to July 2040, according to HSBC, one of the banks handling the operation, although the Dutch government did not immediately give a figure.

The Netherlands is the fifth country to issue environmentally friendly sovereign debt after fellow EU nations Poland, France, Belgium and Ireland.

“The Netherlands is today the first triple A country to issue a green bond,” Dutch Finance Minister Wopke Hoekstra said on Twitter, referring to its international bond rating.

The Dutch finance ministry added: “With green bonds, we finance green expenditures and we stimulate the green capital market. A new step towards a greener economy and a greener Netherlands.”

Climate change and the environment are pressing issues for the Netherlands, where at least a third of the country lies below sea level. Analysts said the Netherlands’ first green bond set a high bar for other countries because of its tough environmental standards.

“We are looking at this green bond with a very favourable eye, particularly because it is the first sovereign green bond with such strict conditions,” said Bram Bos, a portfolio manager at NN Investment Partners.

Hoekstra said earlier this year that these “dark green bonds” would only finance projects that meet specific criteria such as such as making a “substantial contribution to reducing CO2 emissions”.

Green bonds - where governments sell debt specifically earmarked for environmental projects - launched a decade ago, but the overall share of green instruments in global finance remains small. They account for only $156.8 billion or 2 per cent of the global bond market, according to HSBC.

Poland was the first country to enter the green bond market with a more modest €750 million issue in December.

Hong Kong raises $1 bn from green bond sale

Hong Kong raised $1 billion from the sale of its first green bond on May 22, as the former British colony looks to establish itself as a centre for green finance. Hong Kong sold a five-year US dollar-denominated green bond with a coupon of 2.5 per cent, attracting over $4 billion in orders from investors globally, the Hong Kong Monetary Authority said.

The proceeds from green bonds get earmarked for investment in environmentally friendly projects.

The bond is the first to be issued under Hong Kong’s $12.74 billion green bond programme to fund projects around clean transportation, air quality improvement and green buildings. It is one of the largest green bond schemes globally.

Green bonds account for a small portion of the global bond market, but are expected to gain in size, particularly in Asia, which has lagged other regions such as Europe. Worldwide corporate green bond issuance is at $41.3 billion so far this year, while sovereigns have raised $17.8 billion. Asia accounted for $12 billion of the corporate green bonds and $2.6 billion of the sovereign paper, data showed.

Indonesia was the first Asian country to sell a green bond in 2018, raising $1.25 billion.