Beyond Green Bonds: Sustainable Finance Comes of Age

Investment of some $90 trillion is needed in the next 15 years to achieve global sustainable development and climate objectives, according to estimates put forward by the Group of Twenty’s Green Finance Synthesis Report. Over $800 billion needs to be invested every year to 2020 in renewable energy, energy efficiency, and low-emission vehicles alone, according to OECD estimates. To put it all in to perspective, global investment in clean energy in 2016 was only $287.5 billion.

In our view, a key enabler for higher levels of investment in clean energy and other sustainable infrastructure is a standard by which investors can assess the relative merits of a project to be financed with respect to transparency, governance, and environmental impact, its contribution to decarbonization, pollution reduction, as well as resilience to severe climate impacts. Information about the environmental benefit of an investment has become essential to investors seeking to meet green mandates and to mitigate potential future risk of climate-related events.

S&P Global Ratings’ Green Evaluation, launched today, April 26, aims to provide greater transparency and serve as a benchmark for environmental impact. It will assist emerging demand from investors to reward good-quality green investments as the market grows and expands beyond labeled green bonds to sustainable loans, debt, and equity portfolios as well as securitizations.

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