After a quiet August, green bonds issuance in September went through the roof – there have been 17 green bonds issued taking the total issuance amount year to date to US$28.86bn (see green bonds graph on our home page for details).
Media interest matched momentum. There was discussion about growth prospects, whether the market was really contributing, and about whether standards were needed. Let us know if we missed a story and we’ll try and include it next month.
Bloomberg New Energy Finance, Green bonds – where’s the beef? By Angus McCrone
“Are green bonds really beef or just a sizzle?” McCrone’s in-depth analysis looks at green bonds advantages but also lists challenges the market faces: size (to make a real impact), additionally and quality control (standards essential to the development of a healthy market)
Argument three in favour of green bonds is that they open up a new supply of finance. If they did not exist, sustainability-oriented investors could put money in specialist clean energy stocks, but equity represents only a part of the capital needs of the low-carbon transition. In the fixed income part of their portfolios, they would have to fish in the very small pool of bonds issued by “pure-play” renewable energy or sustainability technology companies, or simply try to avoid non-specialist bonds from the worst issuers. The availability of green bonds gives them active choice among a much expanded choice of investments.
Guardian Sustainable Business, Hope for clean economy as $20bn in green bonds are issued in 2014, Many Lubber (Ceres)
Looking for a good reasons to invest in green bonds? Many Lubber calls green bonds a vital weapon against climate change and lists the many reasons why investors should be interested.
There are two reasons why Zurich Insurance Group, one of the largest public companies in the world, is investing $2bn in green bonds. The first is the environmental benefit of investing in projects that will reduce carbon pollution and limit global warming, whether it’s a wind farm in Texas or energy efficiency upgrades to refrigerators and air conditioners in Mexico’s poorest neighbourhoods. The second reason – and most critical to investors – is that green bonds are profitable.
Insight Climate News, Only $1 Trillion: Annual Investment Goal Puts Climate Solutions Within Reach, Elizabeth Douglass
Author’s overview of the challenges that the finance industry faces in the context of $1 trillion figure that IEA estimated as the cost of avoiding disastrous effects of climate change, supported by a quote from Sean Kidney:
"One of the things we're trying to show is that this is an opportunity story in response to the horror of the risks we're facing," says Sean Kidney, CEO of the Climate Bonds Initiative, a London-based nonprofit promoting large-scale investment in a low-carbon world. "We're in a big hole. The key thing is for government and investors to sit down and work it out. It's got to be a grand collaboration to get out of the hole."
Risk.net, Creating the right climate for green structured products, Richard Jory
In-depth green bonds market analysis that presents views of various market players.
The advent of green bonds could finally make green indexes big, liquid and desirable. As the first 'fully green' structured product is launched, there is hope that support from governments and investors will help the sector grow.
Global Capital, KfW - a stronger shade of green, Craig McGlashan
Global Capital’s review of the latest KfW green bond issued in July brings some good news from the German development bank.
“It’s our aim to come regularly to that market,” says Petra Wehlert, head of new issues at KfW in Frankfurt, “starting with the euro, then the dollar and then follow-up products. We consider our renewable programme on a year-to-year basis and allocate disbursements during the year to the bonds we have issued. The renewable programme is long term and so is the green bond programme.”
See our review of the KfW bond
Global Capital, How to turbocharge green bonds
On the role of governments in growing the green bonds market.
For instance, governments could bring green projects to market faster by offering to guarantee the bonds issued to fund them - something that has already begun but has plenty more scope for growth.
Investment & Pension Europe, The changing bond climate, Jonathan Williams
Overview of the green bonds market developments with a focus on potential for green property and Climate Bond Standard developments in this area.
An initiative to establish clear guidelines on what can be regarded as a property-backed climate bond could soon diversify the market further, allowing investors wider access to asset-backed issuances. The proposed standards would cover investment in commercial and residential property and hope to bring about the scale of investment “needed to drive significant improvements in the building environment”, according to the Climate Bonds Green Property Working Group.
Global Water Intelligence, A Watershed moment for green bonds
Water industry trade magazine analyses the emergence of green/climate bonds linked to water projects and asks if ‘blue bonds’ are the next logical step.
In order to shape the future of this rapidly growing market segment, the Climate Bonds Initiative has invited a working group comprising representatives from Ceres, CDP and the World Resources Institute to convene next month in order to define clear criteria for water investments undertaken using the proceeds of green bonds.
Insurance Journal, Insurers Bonding with Climate Change Battle, Don Jergler
Insurance industry trade proudly stresses that almost one in five major investments in green bonds come from the finance industry. Author also rightly predicted green bonds to be an oft-covered topic at the UN Climate Summit.
The path for insurers into the green bonds market – experts view them as being highly attractive to an image-conscious insurance industry with its investments closely monitored and much to gain from funding resilience projects – was well paved in July by Zurich Insurance Group when it announced that it is doubling its investment in green bonds to $2 billion. (…) Climate Bonds Initiative, a research group, expects green bond issuance worldwide to reach $100 billion in 2015, with significant growth from new markets in Germany, as well as China, where the government has called for the growth of a corporate green bonds market.
RTCC, Coal sector eyes salvation in green bond market, Megan Darby
RTCC reports on Climate Bonds Initiative’s strong rejection of the idea of new frontier between green bonds and coal industry.
Beate Sonerud, policy analyst for the green finance think-tank, said in a blog that any investment in “clean coal” would lock in coal use for years to come. That is incompatible with effective climate action, she argued. (…) Even the most efficient coal power stations cause more than double the carbon dioxide emissions of efficient gas-fired plants, they noted. And the only way coal can be part of a low carbon future is with carbon capture and storage (CCS).
FTSE Global Markets – Investing in the good earth
While looking at the bigger picture of climate change risks as well as mitigation efforts undertaken by companies and governments around the world, author talks about recent ‘spate of corporate activity’ in the green bonds market.
The most notable and the largest ever green bond, worth $3.4bn, was recently issued by GDF Suez, the French power company. The Climate Bonds Initiative, a non-profit organisation that promotes investments to combat climate change predicts that total green bond issuance from all sectors will reach $40bn in 2014. Corporations could account for half of this figure based on issuance to date, according to ratings agency S&P.
About Money, On Investing in the Developing World, Sean Kidney
Sean Kidney talks about a strong case for bridging the gap between young and capital needy emerging markets and capital rich ageing countries.
The growth rate here (the Philippines) is finally up – now a blistering 6.4% a year. There is a lot of investment in the Philippines; but they need big slugs of capital if they’re going to be able to choose the expensive route of clean energy and low carbon transport rather than low cost coal and gas power – and yet more clogged highways.
The Globalist, Filipino Climate Bonds, Here We Come, Sean Kidney
Another publication that republished Sean Kidney’s musings from Manila about what is required to push the growth of developing countries in the right direction of clean energy and low carbon transport.
Rich countries should invest capital into fast-growth, green projects in developing countries, which deliver long-term financial and environmental returns. The trouble is, fast-growth projects in emerging markets look risky – and they may be so, buffeted as they are by the winds of big economies’ trade.
The Salt Lake Tribune, More funds look to socially responsible investing, Stan Choe
Author explores the source of investors’ interest in bonds with environmental impact and concludes that growth of green bonds have presented those concerned with more opportunities.
Proliferation of "green bonds," whose proceeds go toward projects with environmental benefits, and similar investments mean more bond funds are using a socially responsible lens.
Corporate Knights, Green bonds see another record quarter as investor enthusiasm rises. Good summary of recent market developments.
Nearly $9 billion (U.S.) in green bonds were issued during the first quarter of 2014, prompting the Climate Bonds Initiative to double its estimate for the rest of the year to $40 billion. “There have been new issuers, new currencies, new underwriters, new areas of issuance and, for the first time, a green bonds index,” according to Bridget Boulle, the initiative’s program manager.
Green bonds broadcast.
Catherine Murray of Business News Network (Canadian financial news TV channel) interviews Sean Kidney on Business Day PM: Sustainable Investing: Green bond market set to grow.
‘Obligations vertes’ - green bonds in the French media.
While green bonds gain interest of media around the world, we highlight two prominent coverage pieces from the French papers: Les Echos and Challenges
Les Echos, Le« vert », la nouvelle manne du marché obligataire, Jade Grandin. This article in the daily French financial newspaper says that companies issuing green bonds ‘seduce’ socially responsible investors and predicts that the surge in green bonds issuance might prove durable
Le marché des « green bonds », ces obligations visant à financer des projets « verts », connaît une envolée prometteuse qui pourrait bien être, justement, durable. (…)Plus de 26 milliards de dollars de « dette verte » ont déjà été émis depuis le début de l’année, d’après l’organisation Climate Bonds Initiative. Ce chiffre devrait se monter à 40 milliards sur l’ensemble de l’année, avant d’atteindre 100 milliards de « dettes vertes » émises en 2015, selon l’organisation.
The newspaper has displayed a significant interest in green bonds and have also published an interview with Solactive about their green bonds index: Les Echos, Astrid Ludwig : « The green bond market has a significant growth potential», Jade Grandin
Challenges, Comment la finance va sauver la planète du réchauffement climatique, Grégoire Pinson
In the article titled ‘How will finance save the planet from global warming’ the author calls green bonds ‘real starts of the UN Climate Summit’ and praises the French for their strong position in this market.
Ce sont les vraies stars du sommet sur le climat de l’ONU, qui se tient aujourd’hui à New-York : les obligations vertes. Après 11 milliards de dollars d’émission en 2013, elles devraient atteindre 40 milliards cette année, selon le Climate bonds initiative, une organisation qui réunit des établissements financiers et des chercheurs du monde entier. Une véritable explosion.
Call for standards
World Finance, Should green bonds be regulated?, Matthew Timms
While appraising the rapid growth of this market, the author highlights the need for consistent regulatory framework that will prevent the risk of issuers ‘exaggerating’ or ‘fabricating’ environmental benefits.
However, as demand for green bonds increases, the instrument’s legitimacy could well suffer and the intended environmental benefits wane, without the right measures in place to ensure the capital is correctly allocated. (…) “We think that clear guidelines are needed as to “what is green”, to both make it easier for issuers and to allow investors to compare apples with apples,” says Kidney.
IFLR, Green bonds’ growing pains, Ashley Lee, Danielle Myles, Zoe Thomas, Gemma Varriale, and Tom Young
6 page green bonds cover story in IFLR is very much a polemic style article where market leaders discuss their views on the key issue facing this developing market: the need for standardization. While CBI think that universal definitions of green are essential to ensure climate impact, there are others who believe that strict standards will stall the market.
The CBI is working on its own climate bond standard. Similar to Cicero, it is rolling out detailed criteria that provide green definitions and guidelines for climate and green bond issuers and investors across a range of industries including wind, solar, green property and rail. (…) ‘Anyone can all anything green,’ says Kidney. ‘But if we’re concerned about the environmental credentials – as most of the institutional investors engaged in this space are – we need to be concerned about these kind of issues.”
Institutional Investor, Institutional Investor, Green Bonds planting seeds for eco-friendly investment, Ben Emons, Luke Spajic of Pacific Investment Management Co.
An interesting analysis of green bonds market developments with an emphasis on the need for green standardization.
In the seven years since their initial unveiling, green bonds have taken off. Rule standardization is the next step for this burgeoning asset class.
Environmental Finance, Bond investors ponder fifty shades of green, Graham Cooper
Author of the article gives an evidence of the growing interest of mainstream investors in the green bonds market and touches on the issue of determining bond’s greenness. He notes the progress made in this direction by Climate Bonds Initiative
CBI’s certification scheme allows investors, governments and other stakeholders to prioritize ‘green’ or ‘climate’ themed bonds with confidence that the proceeds will be used to help deliver a low-carbon economy. It has already agreed Climate Standards criteria for wind and solar energy-based projects and is in the process of developing a set for low-carbon transport projects.
Huffington Post, Green Bonds: Unlocking Capital for the Environment or Just Greenwashing?, Renat Heuberger (Chief Executive Officer, South Pole Carbon)
The author talks about dangers that rising temperatures pose to ‘humans, the environment and the global economy’ and asks if green bonds will can be ‘the saving grace’.
The big challenge that comes with this impressive growth story is the question of quality and transparency. So far, there are hardly any rules or standards defining a Green Bond; essentially it's a Green Bond because the issuer says so. (…) At the current growth speed, Green Bonds must prove that they do indeed contribute to solving pressing environmental issues (…) Initiatives like the Green Bonds Principles, the Climate Bonds Standard or the CICERO Second Opinions on Green Bond Investment Frameworks are great contributions to achieve this goal.
‘Green bonds love fest’ at the UN Climate Summit
Green bonds were a trending topic during the UN Climate Summit; everyone, including Secretary General Ban Ki-moon, was talking about them and some of world’s biggest investors committed to major investments in this market.
USD $2 bn investor statement
Day 1 of the UN Secretary General Climate Summit brought a major announcement from a coalition of investors with $2tn of assets under management (including Aviva, Zurich Insurance and ACTIAM to mention few) that committed them to growing the green bonds market. Summary of the coverage is below:
Environmental Finance, Investors and issuers pledge to expand green bonds market, Graham Cooper
Responsible Investor, UN Climate Summit: Major investors commit to develop green bond market, Vibeka Mair
Sustainable Business, Investors Anxious & Ready to Grow Green Bond Market
The Fifth Estate, Climate wars: here come the Greenbacks, the Euros, the Aussie dollar, the yen, Tina Perinotto
Institutional Asset Manager, Issuers, banks and investors commit to grow Green Bonds market
Renew Economy, Did the New York Climate Summit deliver?, Sophie Vorrath
The Sustainability Report, Investors commit to growing green bond market, Rachel Alembakis
RTCC, Investors worth US$2trn back green bonds at NY Climate Week, Megan Darby
RTCC, What did Ban Ki-moon’s summit deliver on climate finance?, Amal-Lee Amin
Blue & Green Tomorrow, Investors commit to expanding the climate bond market, Charlotte Malone
Business Green, Investment giants throw weight behind green bonds market
Civil Society groups letter to Ban Ki-moon calling for prevention of greenwashing in the green bond market
Another announcement that attracted media attention ahead of the UN Climate Summit.
Environmental Finance, World’s NGOs warn UN of ‘greenwash’ in green bonds market, Sophie Robinson-Tillett
“Even the coal industry is asking … whether green bonds can be a ‘new frontier for the industry’. Clearly the answer is no; we have to shut down coal, not extend its life.” (said Ryan Brightwell of BankTrack)
Brightwell’s call for a “clear and science-based criteria” for the green bond market was echoed by CBI’s CEO Sean Kidney, who said a clear, easy-to-use framework “could make a huge contribution to financing our rapid transition to a low-carbon and climate resilient future”.
Q2 Underwriters League table
Media report on quarterly data gathered by Climate Bonds Initiative that has put SEB bank again in the lead on the Green Bond Underwriters League Table.
RTCC, Swedish bank SEB tops green bond league table, Megan Darby
Environmental Finance, SEB remains top green bond underwriter in Q2, but HSBC and Natixis make gains, Peter Cripps
Barclays announcement
While Barclays’ announcement about their commitment to invest minimum of £1bn in green bonds by November 2015, gained a lot of media traction, we highlight just the two key news stories; Financial Times and Reuters.
Financial Times, Barclays adds to its ‘green’ portfolio with £1bn bonds investment, Emma Dunkley
The bank plans to purchase at least £1bn in investment-grade green bonds, issued by various international agencies including the World Bank, before November 2015 and will work with Climate Bonds Initiative, a non-governmental organisation, to conduct due diligence on the investment.
Reuters, Barclays to invest $1.6 billion in green bonds by November 2015, Nina Chestney
Green bonds Reports
Ethical Markets, Green Bonds growing green infrastructure. Mid-year update partly based on data from Climate Bonds Initiative.
EI New Energy, Green Bonds Bring Muscle to Low-Carbon Financing, Philippe Roos. Article/report partly based on ’Bonds & Climate Change 2014’ report presentation by Climate Bonds Initiative in Frankfurt.
