Future Returns: Green Bonds on the Rise
By Abby Schultz
Green bonds have surged as an investment category in the last decade, with new issuance this year alone expected to reach about US$250 billion globally—a more than 20% increase from a year ago.
The securities provide one of the most direct ways for investors to make a measurable, positive impact on the environment, by funneling capital to projects across the globe that have a specific environmental benefit.
One example from earlier this year is Netherlands-based TenneT Holding’s €1.25 billion (US$1.4 billion) two-part offering to connect offshore wind projects to the onshore electricity grids in the Netherlands and Germany.
Another is China’s Industrial and Commercial Bank of China (ICBC) Singapore branch’s three-part, multi-currency US$2.2 billion-equivalent Green Belt and Road Inter-bank Regulation Cooperation Bond, which will finance renewable energy, low-carbon and low-emissions transportation, energy efficiency, and sustainable water and wastewater management.
The volume of outstanding green bonds—both “labeled” and “unlabeled”—has reached around US$2 trillion, according to Stephen Liberatore, a managing director at TIAA’s Nuveen and manager of the TIAA-CREF Social Choice Bond Fund.
Photo courtesy of Min An.