{"id":63637,"date":"2022-05-26T11:08:19","date_gmt":"2022-05-26T15:08:19","guid":{"rendered":"https:\/\/www.riacanada.ca\/?p=63637"},"modified":"2022-05-26T15:23:55","modified_gmt":"2022-05-26T19:23:55","slug":"as-green-bonds-grow-what-should-investors-know","status":"publish","type":"post","link":"https:\/\/www.riacanada.ca\/wordpress\/magazine\/as-green-bonds-grow-what-should-investors-know\/","title":{"rendered":"As Green Bonds Grow, What Should Investors Know?"},"content":{"rendered":"\n

The $5 billion inaugural green bond sale<\/a> held by the government of Canada in March represented a tiny slice of its overall bond issuance for 2021-2022. Yet the move marked a significant step, as public and corporate issuers around the world are increasingly leaning on green bonds to meet carbon emissions goals. Given the rapidly shifting landscape in this new asset class, what should investors know?<\/p>\n\n\n\n

The global market is already expanding at a rapid pace. According to recent figures compiled by the Climate Bonds Initiative<\/a>, green bond issuances represented roughly half of the overall sustainable debt market in 2021, reaching US$522.7 billion, a 75% jump from 2020. Based on this growth rate, investor expectations surveyed by the Climate Bonds Initiative in October 2021 could very well become reality and lead to issuances of US$1 trillion in 2022 alone.<\/p>\n\n\n\n

Green Bond Guidelines
<\/h2>\n\n\n\n

Of course, growth in green bonds might not have been the same had it not been for certification guidelines developed with the help of technical experts, such as the Climate Bonds Standard, which are meant to be consistent with the Paris Agreement\u2019s target of limiting global warming to 1.5 degree C. These guidelines have served to provide a solid foundation for market credibility, ensuring funds go to credible climate projects and promoting third-party verification thereby generating investor interest. As is the case with any security, however, investors should still perform due diligence before acquiring green bonds since continued credibility and ultimate growth of this critical market is in investors\u2019 hands.<\/p>\n\n\n\n

The Green Bond Framework designed by the Canadian government is aligned with the International Capital Markets Association\u2019s (ICMA) Green Bond Principles (GBP). These define the security as \u201cany type of bond instrument where the proceeds or an equivalent amount will be exclusively applied to finance or re-finance, in part or in full, new and\/or existing eligible Green Projects and which are aligned with the four core components of the GBP\u201d. These four components of the ICMA GBP are:<\/p>\n\n\n\n