How Green Are Your Bonds?

The interest in green bonds has been growing with $694 billion in labeled and unlabeled green bonds outstanding in 2016. Since the European Investment Bank issued the first green bonds in 2007, much of the action has been coming from development banks and municipalities, but in recent years, corporations have been showing interest as well.

At SustainAbility, we see green or sustainability labeled bonds as important tools in the transition to a more sustainable economy. Business can be an important engine for change by identifying and bringing social and environmental solutions and initiatives to life at scale. Green bonds increase corporate access to the capital necessary to fund such initiatives. It’s clear that green bonds have a role to play in how corporations can support the transition to a sustainable economy, but several questions remain. With so many labeled and unlabeled green bonds, how can we be sure these funds are going to projects that truly deliver impact? What does ‘green’ or ‘sustainable’ mean to issuers and investors? How do we avoid mislabeling or even greenwashing? And how can we ensure that the projects these bonds fund are actually having the impact over time that they were intended to have?

We see several barriers that need to be addressed to support faster adoption of green bonds, and to ensure bond proceeds go towards the projects required to enable a sustainable economy.

Read the full article by Christina Wong (senior manager Sustainability)