Green bonds are on the rise. These are bonds where the proceeds of an issue are tied to environmental activities.
Green bonds were kicked off by the World Bank in 2008. For a few years international financial institutions were the only issuers because they had the niche and the know-how to define an environmental project. But this is changing. In a story marking a new issue by Unilever earmarked for reducing waste, water use and greenhouse-gas emissions, The Economist magazine explains the dynamics:
“In February last year the World Bank’s private-sector arm, the International Finance Corporation, raised a $1 billion green bond—large enough for money managers to take notice. In November a French energy group, EDF, raised €1.4 billion ($1.9 billion), the first euro-denominated green bond from a large company. This marked the point at which corporate issuers took over from IFIs as the main issuers of such bonds. EDF’s was twice oversubscribed. Toyota is raising $1.75 billion to help finance sales of car loans for hybrid and electric vehicles. That bond was even more heavily oversubscribed. Unilever changes the business again. The bonds of EDF and Toyota were for new, self-evidently green projects: renewable energy and electric vehicles. Unilever’s is to reduce the environmental footprint of its ordinary activities.”
Perhaps a sign that the private sector tide of green growth/impact investing is really becoming mainstream, (while governments fiddle on climate change).
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