Sustainable Prosperity partnered with London, UK based HSBC and the Climate Bonds Initiative to release the Canadian version of a landmark study on “green” or “climate” bonds internationally, entitled Bonds and Climate Change : The State of the Market in 2012. The study concludes that over US$174 billion of climate and/or green “themed” bonds have already been issued by corporations and international financial institutions, and that the market – both from the supply of new bonds to the demand for such bonds from institutional investors – is growing rapidly.
Sustainable Prosperity has also released its own Green Bonds Policy Brief, which examines the role that government can play in developing green bonds by creating a secure policy environment for environmental technologies, in order to create investment opportunities, and provide guarantees and tax incentives.
As fixed-income securities that raise capital for projects with specific environmental benefits, the Green Bonds Policy Brief states, green bonds are an important mechanism for transitioning to a low carbon, resource efficient and resilient economy. The bonds can be used to fund a variety of projects including public transit, renewable energy and energy efficiency.
The Green Bonds Policy Brief also examines some of ways governments, investors and corporations can overcome the barriers to growth in these markets and provides policy recommendations for governments at all levels. Key recommendations include:
- providing credit enhancement/guarantee/de-risking
- tax preferencing
- bond issuance/marketing - (issuing retail bonds similar to the Canada Savings Bonds)
“More and more, green bonds are considered a smart mechanism to finance everything from household energy efficiency retrofits to public transit. Governments around the world, including China and the US are providing the right policy environment to ensure the growth of this market”.
“Canadian institutional investors have become global leaders in innovation and risk management. Green bonds, which are characterized by their low-risk financial returns and ability to hedge longer-term portfolio risk, are very well suited to the needs of that investor class. It doesn’t hurt that they are a rapidly growing opportunity internationally, as the HSBC/SP report shows”.
Alex Wood - Sustainable Prosperity's Senior Director of Policy and Markets
To review the Sustainable Prosperity 2012 Green Bonds Policy Brief click here.
To review the Bonds and Climate Change (Report by HSBC, Climate Bonds Initiative in association with Sustainable Prosperity) click here.
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