{
  "title": "Green Bonds, Sustainable Finance and Climate Change – IMF F&D | DECEMBER 2019",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2019/12/green-bonds-offer-lessons-for-sustainable-finance-beschloss",
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  "summary": "Green bonds blazed a trail for sustainable finance—investments that could eventually reach into trillions of dollars in climate-related projects",
  "authors": [
    "AFSANEH BESCHLOSS",
    "MINA MASHAYEKHI"
  ],
  "publishDate": "2019-12-01",
  "sections": [
    {
      "heading": "Market growth and uptake",
      "content": "- Green bonds blazed a trail for sustainable finance and could eventually reach into trillions of dollars in climate-related projects, including renewable energy, energy efficiency, and ecosystem protection and restoration.\n- From 2008 to 2018, dozens of institutions and governments issued more than $521 billion in green bonds (Climate Bonds Initiative, 2018 report).\n- In the first half of 2019 alone, new certified green bond issues topped $100 billion globally.\n- Forecasts for the full year 2019 are as high as $250 billion (Environment + Energy Leader).\n- More than 5,000 green bond issues will have come to market by the end of 2019, estimates CBI.\n- The green bond market has proved to be robust, durable, and scalable for a diverse array of market players worldwide."
    },
    {
      "heading": "Standards, verification, and market infrastructure",
      "content": "- Founders created a new class of securities that needed to be credible, replicable, and attractive to institutional investors and environmental organizations.\n- Key voluntary frameworks and protocols:\n  - Climate Bonds Initiative (CBI) launched in 2010 and published the Climate Bonds Standard and Certification Scheme in 2010.\n  - International Capital Markets Association (ICMA) expanded to include a set of green loan principles in 2014.\n- These frameworks assemble teams of scientists and leaders to develop rigorous standards and win endorsement from a critical mass of issuers and investors.\n- Independent verification is essential:\n  - Leading firms such as CICERO and Sustainalytics have conducted external reviews of more than 88 percent of the 5,000 bonds labeled as green by CBI.\n  - Such labeling means that at least 95 percent of proceeds go to environmental uses and that underresearched and controversial areas are excluded.\n- The World Bank developed a rigorous and transparent model for verifying its green bond issues from the start."
    },
    {
      "heading": "Challenges: greenwashing, scope, and measurement",
      "content": "- Dubious players have entered the market, blurring lines between sustainable and nonsustainable projects (examples cited: “clean coal” projects in China; bonds sold by Spanish oil company Repsol).\n- Backlash has sparked debate about the need for more precise definitions of investments that contribute to sustainability and how much.\n- High-certification standards (ICMA/CBI) sometimes exclude contested but climate-relevant and investable areas such as nuclear energy and air travel.\n  - Air travel accounts for 2 percent of the global carbon intensity of emissions—and growing.\n- Sector-by-sector analysis is time-consuming; frameworks for industries such as cement and steel have only recently been explored.\n  - Cement and steel together contribute 15 to 17 percent of global carbon dioxide emissions but are essential to infrastructure that supports the green transition (electric-vehicle charging stations, floodwalls)."
    },
    {
      "heading": "Scale, diversity, and innovation in sustainable finance",
      "content": "- The broader sustainable investment landscape:\n  - Global Sustainable Investment Alliance estimated $30.7 trillion in institutional assets invested in sustainable; environmental, social, and governance–focused; or green products in six major markets at the beginning of 2018 (Australia, Canada, Europe, Japan, New Zealand, United States).\n  - That $30.7 trillion represents an increase of 34 percent since 2016.\n  - Many organizations track a combined labeled impact bond market with an estimated value of up to $1.45 trillion as of 2018.\n- New labeled instruments and niches include:\n  - “Blue bonds” (coastal restoration, marine biodiversity, sustainable fisheries, pollution control).\n  - “Humanitarian bonds” (pandemic disease, migration).\n  - Specialized issuers such as the International Finance Facility for Immunisation.\n- The market is experiencing a period of innovation with new securities and investment structures emerging each year."
    },
    {
      "heading": "Risk-return evidence and investor implications",
      "content": "- Emerging public and private sector data suggest that green bonds often fare better than brown peers in pricing, liquidity, and performance.\n- While definitive conclusions remain elusive, investors appear able to invest in green bonds without hurting portfolio performance, with upside potential as climate-resilient assets may carry lower risks and potential for better returns.\n- Central investor questions:\n  - Should investors accept a lower return on green bonds from a given issuer than on that issuer’s “brown” offerings?\n  - Should issuers expect lower financing costs—a so-called greenium?\n  - Should issuers accept lower internal rates of return on green private equity or infrastructure investments?\n- Fiduciaries’ initial reaction has often been “no,” but attitudes are changing as efforts intensify to better quantify long-term risks and returns associated with climate and the United Nations Sustainable Development Goals versus short-term profits."
    },
    {
      "heading": "Policy and institutional recommendations",
      "content": "- Institutional investors must be savvy when allocating ever-larger sums of capital to green finance.\n- Long-term, sustainable investors and asset owners should:\n  - Insist on rigorous analysis and a high threshold for institutional engagement.\n  - Use seasoned, experienced, and nimble advisors and managers.\n- Continued emphasis on independent verification, clear metrics, and sector-specific standards is necessary to maintain credibility and ensure environmental impact is transparent, verifiable, measurable, and compliant with international standards.\n\nGreen Bonds, Sustainable Finance and Climate Change – F&D Magazine, December 2019\n\n---\n\n Content in this bundle\n\n- وجهة نظر\n  - وجهة نظر (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - وجهة نظر (PDF){rel=\"external\" type=\"application/pdf\"}\n- Un avenir plus vert pour la finance\n  - Un avenir plus vert pour la finance (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Un avenir plus vert pour la finance (PDF){rel=\"external\" type=\"application/pdf\"}\n- Green Bonds, Sustainable Finance and Climate Change – Point of View - IMF F&D | DECEMBER 2019\n  - Green Bonds, Sustainable Finance and Climate Change – Point of View - IMF F&D | DECEMBER 2019 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Green Bonds, Sustainable Finance and Climate Change – Point of View - IMF F&D | DECEMBER 2019 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Более экологически ориентированное будущее для финансов – Финансы и развитие – декабрь 2019 года\n  - Более экологически ориентированное будущее для финансов – Финансы и развитие – декабрь 2019 года (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Более экологически ориентированное будущее для финансов – Финансы и развитие – декабрь 2019 года (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2019/12/green-bonds-offer-lessons-for-sustainable-finance-beschloss"
    }
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    "Authors: AFSANEH BESCHLOSS, MINA MASHAYEKHI",
    "Published: December 1, 2019",
    "Green bonds blazed a trail for sustainable finance and could eventually reach into trillions of dollars in climate-related projects, including renewable energy, energy efficiency, and ecosystem protection and restoration.",
    "From 2008 to 2018, dozens of institutions and governments issued more than $521 billion in green bonds (Climate Bonds Initiative, 2018 report).",
    "In the first half of 2019 alone, new certified green bond issues topped $100 billion globally.",
    "Forecasts for the full year 2019 are as high as $250 billion (Environment + Energy Leader).",
    "More than 5,000 green bond issues will have come to market by the end of 2019, estimates CBI.",
    "The green bond market has proved to be robust, durable, and scalable for a diverse array of market players worldwide.",
    "Founders created a new class of securities that needed to be credible, replicable, and attractive to institutional investors and environmental organizations.",
    "Key voluntary frameworks and protocols:",
    "These frameworks assemble teams of scientists and leaders to develop rigorous standards and win endorsement from a critical mass of issuers and investors.",
    "Independent verification is essential:",
    "The World Bank developed a rigorous and transparent model for verifying its green bond issues from the start.",
    "Dubious players have entered the market, blurring lines between sustainable and nonsustainable projects (examples cited: “clean coal” projects in China; bonds sold by Spanish oil company Repsol).",
    "Backlash has sparked debate about the need for more precise definitions of investments that contribute to sustainability and how much.",
    "High-certification standards (ICMA/CBI) sometimes exclude contested but climate-relevant and investable areas such as nuclear energy and air travel.",
    "Sector-by-sector analysis is time-consuming; frameworks for industries such as cement and steel have only recently been explored.",
    "The broader sustainable investment landscape:",
    "New labeled instruments and niches include:",
    "The market is experiencing a period of innovation with new securities and investment structures emerging each year.",
    "Emerging public and private sector data suggest that green bonds often fare better than brown peers in pricing, liquidity, and performance.",
    "While definitive conclusions remain elusive, investors appear able to invest in green bonds without hurting portfolio performance, with upside potential as climate-resilient assets may carry lower risks and potential for better returns.",
    "Central investor questions:",
    "Fiduciaries’ initial reaction has often been “no,” but attitudes are changing as efforts intensify to better quantify long-term risks and returns associated with climate and the United Nations Sustainable Development Goals versus short-term profits.",
    "Institutional investors must be savvy when allocating ever-larger sums of capital to green finance.",
    "Long-term, sustainable investors and asset owners should:",
    "Continued emphasis on independent verification, clear metrics, and sector-specific standards is necessary to maintain credibility and ensure environmental impact is transparent, verifiable, measurable, and compliant with international standards.",
    "**وجهة نظر**",
    "**Un avenir plus vert pour la finance**",
    "**Green Bonds, Sustainable Finance and Climate Change – Point of View - IMF F&D | DECEMBER 2019**",
    "**Более экологически ориентированное будущее для финансов – Финансы и развитие – декабрь 2019 года**"
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