Responsible Investment

“Green bonds can fund the rapid transition to a low-carbon economy”

October 26, 2012
© Photo FSinsight
http://www.youtube.com/watch?v=qAOzw56qBhI

According to estimates of the International Energy Authority, about US$10.5 trillion of investment has to flow into low-carbon industries if tipping points for runaway climate change are to be averted. To encourage investment in renewable energy sources, the Climate Bonds Initiative was launched in December 2009 during the Copenhagen climate conference. It provides an index of bonds and has developed a “Climate Bond Standard”, a screening tool which certifies to investors and governments that their investments are contributing to the low-carbon economy.

Currently, institutional investors are heavily weighted to the old economy, to the fossil fuel economy, Nick Silver acknowledges. According to him, bonds are also very suited to invest in renewable energy and energy efficiency because in the long-term, they provide low-risk returns. “For example, a wind farm needs a lot of money to build, but once it’s up and running it doesn’t require any petrol to produce energy and the profits can be used to repay the bond.” To support green investments, the Climate Bonds Initiative report, “Bonds and Climate Change – the State of the Market in 2012”, commissioned by the HSBC Climate Change Centre of Excellence, presents a first estimate of the outstanding global bond market size linked to key climate change themes. It explores the key investments themes and regional markets and also identifies three key ways to accelerate market expansion.

References

This video interview was recorded in Amsterdam on 4 October 2012 during the ESG Europe 2012 Conference “Business Critical Sustainability”, organized by the Responsible Investor.

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Green bonds can fund the rapid transition to a low-carbon economy”, Nick Silver, www.tias.edu, October 26, 2012.

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Report: “Bonds and Climate Change – the State of the Market in 2012”
Website Climate Bonds Initiative

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