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July 13, 2015
Green Bond Investments Reach $600 Billion
by Robert Kropp
The fourth edition of Bonds and Climate Change, published by the Climate Bonds Initiative, reports
that 70% of climate-aligned bonds are invested in low-carbon transport, while another 20% focus on
Even before all the data was in, we knew that 2014 was a somewhat unexpectedly strong year for
At the United Nations in January, a coalition of investment banks
organized by Ceres announced its support for the Green Bond Principles (GBP). According
to Ceres, the Principles “serve as voluntary guidelines on recommended process for the development
and issuance of Green Bonds. They encourage transparency, disclosure and integrity in the
development of the Green Bond market.”
At a February webinar hosted by As You
Sow, Amelia Timbers of the organization stated, “In 2013, there were over $10 billion in green
bonds issuances, and that figure is expected to double in 2014.” But by June, Bloomberg reported,
“At its current pace, total 2014 volume could surpass $40bn, triple the $14bn issued in 2013.”
In September, while marchers on behalf of the climate filled the streets of New York, a
group of institutional investors published an Investor Statement, which welcomed
the evolution of the Green Bonds market. “We, as investors and fiduciaries, understand that we have
a responsibility to address threats to the future performance of our investments from climate
change,” the signatories wrote.
Later in 2014, As You Sow recently published Green Bonds in
Brief, which reported that Bloomberg's forecast in June was on the mark: according to the
Climate Bonds Initiative, over $35 billion was invested in Green Bonds during 2014.
anything, the trend is clearly accelerating, according to updated reporting from the Climate Bonds Initiative; through June
of this year, $14 billion has been invested in green bonds, and the nongovernmental organization
(NGO) predicts a $70 billion market by the end of 2015.
When other climate-aligned
bonds—95% of whose assets are determined to be climate aligned, but which are not labeled as green
bonds—are taken into account, the numbers increase exponentially. The total climate-aligned bond
market, according to the Initiative, comprises nearly $600 billion; of this amount, $66 billion is
from labeled green bonds. “The climate-aligned universe has increased by $95bn since the 2014
report,” the new report states. “Almost a third of the increase (32%) came from the rapid growth of
the labelled green bond market (additional $30.6bn of green bonds).”
The report also notes
especially strong growth in climate aligned bonds in emerging markets; in fact, the nation with the
largest share of the market is China, where investments total $164 billion, or one-third of the
total market. And this year, India became the first emerging economy to issue labeled green bonds;
China is expected to follow suit shortly.
The dominant themes of the climate-aligned bond
market are low-carbon transport and energy; 70% of climate-aligned bonds are invested in low-carbon
transport, while another 20% focus on clean energy.
The report concludes with ten
recommendations for policymakers to consider in order to help strengthen investor confidence in the
green and climate-aligned bond markets:
1. Strategic issuance from public entities
2. Strengthening planning and pipeline transparency of green projects
the risk-return proﬁle of green bonds: credit enhancement
4. Tax incentives
5. Boosting demand: domestic fund mandates
6. Central banks: boosting demand and
7. Market integrity: Supporting standards development
creation and development: aggregation of small-scale green assets
regulatory measures are important
10. International ﬁnancial cooperation.
"Investors representing $43 trillion of assets under management signed statement at last
September’s UN Climate Summit about the importance of addressing climate change and their
willingness to invest accordingly, subject to meeting their risk and yield requirements," Climate
Bonds Initiative CEO Sean Kidney said. "This report shows them that there’s a large and liquid $600
billion universe of bonds they can invest it–and it’s 90% investment grade.”
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