Investors with $45trn of assets under management have made public commitments to climate and responsible investment - green bonds can help them achieve their pledges in fixed income
The key difference between conventional and green bonds is the specified use of proceeds. Investors are increasingly focused on integrating Environment, Social and Governance (ESG) factors into their investment processes. Green bonds meet these Environmental objects. Investors in green bonds benefit from:
- Funding green projects without taking any additional risk or cost.
- Greater transparency into a bond’s use of proceeds
- Meeting commitments as signatories of PRI and IIGCC
- Reporting on climate impact of fixed income investments to their end asset owner
Huge demand for green bonds with most of the issues oversubscribed
The huge demand for these bonds is coming from a range of investors. Some examples include:
- Mainstream Institutional investors; Aviva, BlackRock, State Street
- Specialist ESG (Environmental, Social, Governance) and Responsible Investors; Natixis, Mirova, ACTIAM
- Corporate Treasury; Barclays, Apple
- Sovereign and municipal governments; Central Bank of Peru, California State Treasurer
- Retail investors; World Bank issuances for retail investors through Merrill Lynch Wealth Managers and Morgan Stanley Wealth Managers. IFC and SolarCity issuances for retail investors through Incapital.