Green Bond Benefits for Proactive Investors

Green is comprised of sustainable resource utilization, renewable energy, conservation, climate change adaptation, and clean transportation.

Picture 1 of Green Bond Benefits for Proactive Investors

Reasons to invest in green bonds

Investors have been shown increased interest in green bonds and climate bonds initiative, disclosure, and Green Bonds standardization, to make sure that bonds can be correctly processed and used while ensuring that the preference of investors is met. It's concerning that an onerous level of requirements can deter investors. A balanced approach is required.

Benefits Investor Demands

Investors now prefer socially responsible investment (SRI) opportunities and want businesses that engage in different climate bonds initiatives. While retail investors want sustainable investments from their fund managers and brokers, institutional investors that utilize green bonds for ESG (Environment, Social, Governance) require something that, before Green Bonds, had been difficult to address via fixed income tools. Green bond issuances have attracted old and new investors, offering a potential market for future issuances.

Enabling Projects at a Lower Capital Cost

Green bonds are an excellent way to secure large amounts of capital to support environmental investments that may not otherwise be available, or that may be uneconomic using more expensive capital. Green bonds are well suited for large-scale sustainability projects such as wind and solar development, which often require capital investment ahead of revenues, and which generate modest revenue over a longer investment horizon.

Leadership

Green bond issuers will be leaders in developing the leadership space for the foreseeable future. They can encourage others to participate and develop a financially innovative reputation. Early adopters will spearhead the financing of environmental projects. Government can also support and participate in coalitions and working groups that shape the market, ensuring lasting success and developing standards.

Press & Brand Value

Green Bonds and climate-aligned bonds initiative offer businesses and governments with the ability to brand themselves as innovators, forward thinkers, and sustainability champions. The press like covering green bond issues. Many companies receive coverage by financial news reporters, resulting in media coverage and interview requests.

Green Bonds over other options

Green Bonds provide a worthwhile opportunity for issuers and investors to create sustainable growth while leading the investment community.

It provides institutional investors with the ability to access sustainable investments a familiar, low-risk option in the fixed income market. Utilizing this emerging security type gives a strong, proactive message to customers and stakeholders while attracting more investors.

Green Bonds also offer municipalities with a fantastic opportunity to build Public-Private-Partnerships (PPPs) to boost the advancement of emerging technologies and energy efficiency. A good example of this is the 'Morris Model', where Morris County issued low-cost bonds for solar projects on government structures while passing along the low cost to private developers.

Looking to go green and benefit from wider investment opportunities, growth, or unique possibilities? The climate bonds initiative expands opportunities for building climate-themed portfolios beyond labeled green bonds. Climate-aligned bonds (CABs) identify untapped areas of potential where future green bonds can be labeled.

David Pac

Update 19 June 2022