Tsvi Mark, Analyst
Green Bonds: A Win-Win
Finance has been growing greener and greener. The sprouting of green finance is probably best displayed in the budding world of green bonds. Green bonds are not named such because they come in a different color, but rather because they are issued to back environmentally-friendly initiatives or firms. To receive the label of a Green Bond, the issued bonds must either come from a “green” company (companies focused exclusively on environmental issues – for example, one that builds and installs solar panels for homes and business) or from a company or government organization that issues the bond to fund a green purpose.
The world of green bonds was a very small portion of global bond issuance, and only in 2014 did green bond annual issuance cross the $10 billion mark. However, since then, green bond issuance has taken off. In 2016, green bond issuance totaled nearly $90 billion. Since the start of 2017 (through the 7th of March), the green bond industry has continued to sprout with more than $16 billion in new issuance, $100 million more than the whole first quarter of 2016 -- and we still have three more weeks to go until the end of the first quarter. With green issuance keeping at this pace, we may soon see green bonds reach $100 billion in annual issuance for the first time.
Here at Clarity Capital, we believe finance and social issues are not at odds and see green bonds as a great example of the synergy finance and environmental care have created. It is easier to be green!