Investors commit to expanding the climate bond market

Investors managing assets over $2 trillion (£1.2tn) committed to growing a global market in the financing of climate change solutions at this week’s UN climate summit in New York.

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In the past year there has been rapid growth in the green bonds and climate bond market as a mechanism to tap the global bond market to finance solutions to climate change. Over the course of 2014, over $25 billion (£15bn) of green bonds have been issued. The Climate Bonds Initiative expects the total for this year to reach $40 billion ($24.5bn) and for issuance top $100 billion (£61bn) in 2015.

In a statement, some of the investors attending the event say that they understand they have a responsibility to address threats to the future performance of their investments from climate change, as well as a responsibility to secure their clients’ savings through sustainable and responsible investments.

Sean Kidney, Climate Bonds Initiative CEO, said, “Enormous opportunity exists to develop green bond financing in the coming year, including working with organisations making commitments in other workstreams of the UN summit – cities, low-carbon transport, clean energy. That applies to emerging as well as developed markets.”

He continued, “The response to climate change also requires substantial investments in areas such as water infrastructure; adaption measures for communities; and the climate-proofing of existing infrastructure.

“It requires a rapid transition to a low-carbon and climate resilient economy. The scale of the task requires mobilising trillions of dollars of private sector capital as well as public expenditure.”

The signatories of the statement committed to working to “grow a large and robust market that makes a real contribution to addressing climate change”. They also called on governments to develop projects that could be financed through green and climate bonds and issuers to ensure transparency.

Erik Jan van Bergen, CIO of ACTIAM, a Dutch institutional investor, commented, “Climate change is real. Mitigating and adapting to it are vital challenges for societies worldwide. Acting on clients’ behalf as key economic players, investors do have a responsibility to take.

“Gigantic investments are need. These amounts are investments yielding returns, they are not costs. To provide the necessary capital, we need to activate the world’s large debt capital markets. Green bonds and climate bonds are a means to do so.”

Photo: linno1234 via Freeimages

Further reading:

Report: climate bonds enter mainstream, reaching $502bn

Campaigners call for clarity in Green Bond Principles

Zurich backs responsible investment and doubles green bond commitment

European Investment Bank issues €500m climate awareness bond

Green bond investment forecasted to double in 2014