February 13, 2014 CR Magazine | R. Paul Herman & Srdana Pokrajac
Green Bonds can benefit society — and investor portfolios
A CFOs and corporate executives courting those investors who are prioritizing sustainability in their portfolios now have a new type of financing to consider: Green Bonds. These new financial instruments seek both ecological and economic benefits.
In November 2013, Bank of America (NYSE: BAC) issued a three-year, fixed-rate $500 million Green Bond as part of the bank’s 10-year, $50 billion environmental business initiative whose proceeds will target alleviation of climate change, accelerate the shift to alternative energy resources, and spur energy-efficient economic solutions.
Showing the financial industry is getting serious, 13 major global investment banks committed to the Green Bonds Principles (GBP), a set of voluntary guidelines designed to assess issuances of Green Bonds for multiple types of investors: development banks, multilateral institutions, investment banks, and corporations. The principles also recommend transparency and disclosure, and promote integrity. Green Bonds were developed by the World Bank and the SEB Group in 2008. Green Bonds have initially attracted mostly development banks, but according to Reuters, nearly $10 billion has been raised, and half of that was raised only in November 2013.
Read the full article HERE.