Children as young as three are taught ways to save the environment. It's a saying we all know: Reduce, Reuse, Recycle. With the impact of climate change becoming more and more apparent, it's necessary of for today's society to be mindful of our environment, in order to leave the next generations with a healthy future.
The environment is where we all meet; where all have a mutual interest; it is the one thing all of us share.
- Lady Bird Johnson
Protecting the environment is not always the easiest thing to do. It's hard for investors to know whether a project is truly "green" or not. But, it's getting easier. Green bonds represent an exciting opportunity for socially and environmentally conscious investors, who want to make sure their dollars are going towards protecting and restoring the environment.
What are Green Bonds?
One resourceful way to save our environment is using green bond projects; a development process that is being considered worldwide. Green bonds are bonds specifically to be used for projects related to climate and the environment. Green bonds are, generally, asset-linked bonds backed by the issuer. Purchasing a green bond is a promise from the issuer to repay the bond amount to the investor, with interest.
Companies, such as Impact International Secured Investments headquartered in Vancouver, are starting to specialize in Green Bond issues. The main objective of these companies are to help sustainable, socially responsible, and renewable energy projects off the ground.
Eligible projects are those that help to preserve, protector or remediate air, water or soil. In addition, projects that help to diminish the effects of climate change, such as:
- Waste management
- Soil remediation and treatment
- Recycling and recovery
- Water management and treatment
- Sustainable forests management
- Sustainable agriculture management
- Renewable energy
- Smart Grid energy infrastructure
- Alternative energy transportation
One of the special aspects of green bonds is that they cannot be used for projects that are not low carbon. Investing in these bonds guarantees that your investment will only be used for green projects.
Why Green Bonds?
According to Bloomberg Businessweek's Emily Chasan, “securities are just like regular bonds, except their proceeds are earmarked to fund projects that have positive benefits for the environment or climate. Countries including Poland and France, have issued them to support renewable energy. Companies may use bond proceeds on projects that reduce emissions or enable funding for electric vehicles. Municipalities are also big issuers of green bonds.”
Green bond finance is another term for climate finance. Companies are seeing many benefits as green bonds offer a way to finance projects that might otherwise be very difficult to fund. Even the province of Ontario uses green bonds as a way to finance public transit projects, extreme-weather resistant infrastructure and energy efficient projects.
Green bonds have been continuing to rise as the world and investors look towards the future and planning for long term climate remediation. According to Goldman Sachs, the green bond market is up 50% year-over-year, with over $45 billion USD issued in the first quarter of 2019. The market is predicted to grow stronger as investors seek opportunities that provide attractive financial return and that produce positive environmental impacts. In addition, many corporations are making the transition to green bonds as transparency and value of companies making the switch to sustainability become more and more important to consumers.
A Note to Remember
While green bonds do represent an enticing business opportunity, it is important not to view them solely as such. Green bonds are a positive call to action, a way to aid and nurture our planet, while still being responsible with our finances.
Planning for the future is always a difficult path, but green bonds provide a new pathway. Green bond financing is available now, and is only growing in popularity and commonality. Green bonds are an excellent step towards remediating climate change and promoting the funding of low-carbon projects.
Despite what some of the confusing articles on green bonds that can be found internet suggest, green bonds are not a coveted secret. Impact International Secured Investments' research on green bonds is shared with anyone who has interest in making a positive change. They are here to guide investors, who are looking for climate-smart initiatives.