The concept of green bonds dates back to 2007, when the European Investment Bank and the World Bank pioneered this type of instrument as a way of raising funds for projects tackling climate- and environment- friendly projects. Since then, multilateral development banks have continued to issue green bonds, mostly in relatively small sizes.
More recently, however, the market has seen an influx of new issues – and in 2014 alone, the market tripled in size. The recent growth has been spurred in part by a greater focus around the world on climate change, resource efficiency and green issues in general.
For corporate treasurers, the rise of green and sustainable bonds presents some interesting opportunities. Historically, sustainability has not sat within the domain of treasury – but in the last few years, treasurers have taken on more responsibility at the strategic level. This has included finding ways for their organisations to act responsibly from an environmental, social or governance (ESG) perspective.
In practice, most companies issue debt for investments that are within their growth strategy or needed to finance operations. Where green bonds are concerned, the challenge for treasurers is to understand how this can play to their benefit.
Read the full article by Aila Aho, Head of Sustainable Financing, Nordea, Wholesale Banking, and Andre Chanavat, Senior Product Manager, Thomson Reuters