Connect with us

Hi, what are you looking for?

CleanTechnica
Featured Image by Chanan Bos, CleanTechnica

Climate Change

Green Bonds Bring Renewable Energy To Life — What Does Your Portfolio Look Like?

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.

When it comes to incorporating environmental, social, and governance (ESG) considerations, green bonds have come to the forefront the of financing solutions for environmental and social problems. Yet green and sustainable bond and loan financing by companies has slowed as many firms have had to deal with urgent funding needs amid the coronavirus crisis.

How green does your portfolio look?

The fixed income market is, with increasing frequency, being used as a tool to solve or combat problems, whether climate change or COVID-19. Environmental Finance’s bond database shows that green bond issuance has stalled in recent months, but it has been replaced with issues of COVID-19 bonds, which often carry social or sustainability labels.

Green bond performance is now starting to deliver what’s being called “greenium.” UBS analysts said in late March that they expected green bonds to show “lower volatility and smaller drawdowns” during stressful market periods, according to Bloomberg Green. Green bonds have “proven to be a more defensive way to invest in investment grade debt,” said Thomas Wacker, head of credit research at UBS.

David Zahn, head of European fixed income at Franklin Templeton Investments, said “this is the opportunity that you can actually try to put in policies to limit the amount of carbon emissions over the next several years.”

The World Bank & Green Bonds

The mission of the World Bank is to end extreme poverty and boost shared prosperity in a sustainable manner. Tackling climate change plays a critical role in achieving these goals. Through World Bank Green Bonds, investors make an impact by supporting the financing of a wide range of projects across many sectors that address climate change.

Renewable Energy & Energy Efficiency and Clean Transportation made up the largest portion in the Green Bond eligible projects portfolio in 2019. They comprised approximately 66% of all Green Bond commitments. Projects included the categories of mitigation and adaptation.

Mitigation:

  • Solar and wind installations
  • Funding for new technologies that permit significant reductions in greenhouse gas emissions
  • Rehabilitation of power plants and transmission facilities to reduce greenhouse gas emissions
  • Greater efficiency in transportation, including fuel switching and mass transport
  • Waste management (methane emission) and construction of energy-efficient buildings
  • Carbon reduction through reforestation and avoided deforestation

Adaptation:

  • Protection against flooding (including reforestation and watershed
    management)
  • Food security improvement and implementing stressresilient agricultural
    systems (which slow down deforestation)
  • Sustainable forest management and avoided deforestation
green bond

Image retrieved from BART.gov

As climate action and risk become increasingly central to public policy-making and corporate strategy, institutional investors are also increasing their focus on environmental governance practices, management systems, and investment criteria. Green debt issuance went from a single bond in 2007 to nearly $258 billion from nearly 500 issuers in 2019. The total amount will need to expand to meet the world’s need for alternatives to fossil fuel. The field is evolving, and experts are developing various means of certifying and rating projects.

Green bonds offer a direct way to reduce a portfolio’s carbon footprint, while offering performance potential from a growing market. Isn’t it time to talk to your financial advisor about what green bonds provide you in terms of financial performance?

Featured image by Chanan Bos/CleanTechnica

Appreciate CleanTechnica’s originality? Consider becoming a CleanTechnica Member, Supporter, Technician, or Ambassador — or a patron on Patreon.

 
 
Have a tip for CleanTechnica, want to advertise, or want to suggest a guest for our CleanTech Talk podcast? Contact us here.

Written By

Carolyn Fortuna (they, them), Ph.D., is a writer, researcher, and educator with a lifelong dedication to ecojustice. She's won awards from the Anti-Defamation League, The International Literacy Association, and The Leavy Foundation. As part of her portfolio divestment, she purchased 5 shares of Tesla stock. Please follow her on Twitter and Facebook.

Comments

#1 most loved electric vehicle, solar energy, and battery news & analysis site in the world.

 

Support our work today!

Advertisement

Power CleanTechnica: $3/Month

Tesla News Solar News EV News Data Reports

Advertisement

EV Sales Charts, Graphs, & Stats

Advertisement

Our Electric Car Driver Report

30 Electric Car Benefits

Tesla Model 3 Video

Renewable Energy 101 In Depth

solar power facts

Tesla News

EV Reviews

Home Efficiency

You May Also Like

Polls/Surveys

Last month, the National Highway Traffic Safety Administration (NHTSA) released its early estimates of motor vehicle traffic fatalities that took place in 2020. It...

Air Quality

Indigenous groups in Brazil are worried the health impacts of the inescapable smoke from the upcoming fire season will be even worse than normal...

Climate Change

When lockdowns during the coronavirus pandemic cut local nitrogen oxide emissions, the effect on ozone pollution was global and unexpectedly rapid.

Clean Power

By Jonathan Jackson  At the start of 2021, the first six ASX-listed companies began improving their Environmental, Social, and Governance (ESG) credentials and reporting...

Copyright © 2021 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.