Today the Climate Bonds Initiative published its fifth annual analysis of the climate-aligned bond universe. The report, Bonds and Climate Change: that State of the Market in 2016, finds and measures bonds that being used to fund low carbon and climate resilient infrastructure. The report studies green bonds and bonds that are financing climate solutions but do not have an official label.
The report’s key findings include:
- The climate-aligned bonds universe now stands at $694bn outstanding – A jump of $96bn (16%) from the 2015 figure. This total is comprised of unlabelled climate-aligned bonds at $576bn and labelled green bonds at $118bn.
- The universe is made up of over 3,590 bonds (issued from Jan 2005 to May 2016) from 780 individual issuers across transport, energy, buildings and industry, water, waste and pollution and agriculture and forestry.
- In the climate-aligned bond universe, the Chinese RMB is the dominant currency (with 35% of the total amount outstanding), followed by the US dollar (24%) and the Euro (16%).
- 78% of the universe is investment grade; the majority of bonds have tenors of 10 years or more; the majority are also government-backed.
- The $96bn increase on 2015 includes $94bn in new bonds from existing issuers, plus $85bn from new issuers minus $83bn of matured bonds and issuers that no longer meet our climate-aligned criteria.
- Low carbon transport was the largest single sector, accounting for $464bn (67%) of the total climate aligned universe, followed by clean energy at $130bn (19%).
- The remaining $97bn (14%) is drawn from Building and Industry, Agriculture and Forestry, Waste and Pollution, Water or Multi-Sector bonds; a small but welcome pointer towards more diversity in issuance.
During the research phase of the report, we analysed over 1,700 different issuers to discover those with over 95% of revenue derived from climate-aligned assets. Bonds from these issuers formed the data pool used in compiling the report.
The HSBC Climate Change Centre of Excellence commissioned State of the Market 2016, continuing their support from previous years.
Zoe Knight, Managing Director of Climate Change Centre of Excellence at HSBC, said: “The growth in size and depth of both the climate aligned and labelled green bonds is a positive for potential investors looking to lift their green exposure post the COP21 at Paris. It’s a sign of the scale and liquidity in the market and demonstrates the potential for future green investment.
“Encouragingly, the report shows that financing low carbon growth paths in the major emerging economies through green bonds has begun and with sound market frameworks, can undergo rapid growth.”
Sean Kidney, Climate Bonds CEO, said: “Bridging the climate finance gap doesn’t require complex new investment models. The re-alignment of bond market activity with climate change and low emission goals will deliver a stable long term source of green investment. This report shows that the large scale harnessing of bonds and other forms of debt based capital towards climate and carbon goals is within reach.
“Green bond based capital to fund infrastructure projects are now an established model. As countries look to turn their INDC commitments into climate plans the report shows that green and climate resilient transport, urban development, water and energy projects are already being financed by green bonds and can be scaled up. The biggest challenge now is for policy makers and investors to develop models that simply accelerate the flow of investment.”
Country Specific Findings: China & USA
China leads the top 10 countries for climate aligned bonds with $246bn of total issuance (36%) followed by the US ($136bn/16%) then the United Kingdom and France ($62bn 9% & $64bn 9% respectively).
Unlabelled issuance is dominated by China Railway Corporation (largest issuer with $194bn). This figure highlights the significance of bonds within the transport sector and demonstrates the continuing importance they will play in raising finance for low-carbon transportation.
Our collaboration with entities such as the CCDC, CECEP, NAFMII and Shanghai Stock Exchange has helped to identify more unlabelled domestic bonds
At 16%, the USA is the second largest country of issuance. Burlington North Santa Fe is the largest issuer from within the USA, making up 17% of USA issuance alone. While issuers in the Energy theme tend to be much smaller, they are also more numerous with over 200 separate Energy issuers making up a total of $28bn issuance.
40% of the entire Water theme is made up of US issuers, primarily Municipal bonds which have been labelled as green bonds. USA-based issuers continue to drive the green labelled bond market, the USA being the largest single issuing country to date of labelled green bonds.
4 Common Items That Can be Reused Again and Again
As a society we are getting much better at taking our obligations to the world and environment around us more seriously. This is undoubtedly a good thing! The effects of climate change are beginning to manifest across the world, and this is turning the issue from an abstract threat into a very real danger. Trying to introduce some greener, more eco-friendly practices into your life isn’t just a great way of doing something beneficial for society and the world around you. It is a wonderful way of engaging positively with the world and carries with it numerous psychological benefits.
Being a greener, more ecologically friendly person doesn’t require any dramatic life changes. Breaking or making a few small habits is all it takes to make your life a greener one. In this article we look at one of the easiest, yet most effective green practices to get into: reusing everyday items.
Jars and Containers
Glass and metal are widely recycled, and recycling is a good thing! However, consider whether any containers you buy, whether it’s a tub of ice cream or a jar of coffee, can be washed out and reused for something else. Mason jars, for example, can be used to store homemade pasta sauce and can be washed for future use. Once you start thinking about it, you will find endless opportunities to reuse your old containers.
An ice-cold soda is a wonderful treat on a hot day, but buying soda can get expensive, and the manufacturing and distribution of the drinks themselves isn’t great for the environment. However, by holding on to your old soda bottles and repurposing them as water bottles, you can save money on drinks, or use them to measure out water for your garden.
Most of the time groceries come in paper bags, which are better for the environment than the plastic alternatives, but they are less durable and thus harder to reuse. Whenever the store places your items in a plastic bag, hang onto it so you can reuse the bags again. If you want to take it one step further, consider looking into buying some personalized recycled bags. These bags are designed to last for a long time and are made of recycled materials. They look striking and unique, they’ll turn heads, and maybe even attitudes!
If you’re a keen gardener, then you will already probably know how to reseed your plants in order to ensure a fresh crop after each plant’s lifecycle. If you have space in your garden, or haven’t yet tried your hand at gardening, then consider planting a small vegetable plot. Growing your own veggies means that you’ll be helping to cut back on the emissions generated by their transport and production. The best part about growing your own food in this way is that, by harvesting properly and saving the seeds, you can be set up with fresh vegetables for life!
Reusing and recycling common household items is an easy way to make your world a little bit greener. Once you start looking for these opportunities you’ll realize that they’re everywhere!
These 5 Green Office Mistakes Are Costing You Money
The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.
Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.
Here are some important mistakes that you will want to avoid.
Only implementing sustainability on micro-scale
The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.
Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.
Not prioritizing investments by long-term ROI
It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.
Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.
Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.
Implementing green changes without a plan
Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.
Before implementing a green strategy, you must answer the following questions:
- How will I communicate my green business philosophy to my customers?
- How will running a green business affect my revenue stream?
- How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
- How will my company finance green upgrades and other investments?
The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.
Not considering the benefits of green printing
Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.
Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.
According to experts from Doranix, environmental printers have several benefits:
- They can process paper that has been completely recycled.
- They consume less energy than traditional printers.
- They use ink that is more environmentally friendly.
You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.
Poorly communicating your green business strategy to customers
Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.
The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.
You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.
Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.
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