Green Bonds Merge Investor Goals
AUGUST 1, 2014 • WILLIAM L. HAACKER
When it comes to investing in the environment, it’s getting easier to be green.
Green Bonds have been around for a while: Washington State sold more than $3 billion worth in 2008 to combat climate change, and Massachusetts sold more than $100 million to improve energy efficiency in state buildings, river revitalization and land acquisition in June 2013.
But the space has grown since then, according to a July report by the Climate Bonds Initiative:
- The total universe of bonds linked to climate-change solutions amounts to $502.6 billion compared to $346 billion a year ago.
- $35.8 billion of that total is composed of green bonds issued by corporations and development banks.
“Investors are concerned about climate change,” Sean Kidney, chief executive officer of the Climate Bonds Initiative, wrote in the report.
“The investment opportunities we find are safe and secure investment-grade bonds. This is a Dull Green Market—just how pension funds and insurance funds like it.”
Green Bonds have underwritten projects that include transportation; clean, renewable energy (solar and wind); energy-efficient buildings and industry; agriculture and forestry; waste and pollution controls; clean water; and “brownfields” redevelopment (the development of land with environmental issues). Toyota, Nissan and Chevrolet have used them to develop electric and hybrid vehicles.
The report indicated urgency for such projects, noting the International Energy Agency has said the world has five to 10 years to avoid reaching “climate tipping points” and “trillions in additional finance will be needed.”