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Green bonding with the planet

The global green bond market is experiencing a growth spurt.

Climate change and global warming is the defining issue of our time, caused by the planet’s atmosphere trapping heat, a phenomenon known as the greenhouse effect. The gases that contribute to this include carbon dioxide, methane, nitrous oxide and chlorofluorocarbons, caused by burning fossil fuels like coal and oil as well as clearing land for agriculture and industry, according to the National Aeronautics and Space Administration (NASA).

Traditional financial investments often support fossil fuel projects. However, with the world working towards the reduction of climate change-related carbon emissions, the green bond market is blossoming. This past spring, the Investment Industry Association of Canada (IIAC), which advances the growth and development of the Canadian investment industry, released the report Opportunities in the Canadian Green Bond Market. Green bonds are used to finance projects or a mix of assets that are linked to climate change solutions. The largest suppliers of green bond issuance are the US, China and France, with investments in renewable energy taking up the lion’s share of green bond funds, followed by low-carbon buildings and energy efficiency, the report states.

In Canada, some provincial governments have recognized the importance of climate change, implementing carbon taxes, cap and trade and other initiatives. Increasingly, Canadian debt capital markets are embracing “the green market sector as the increase in socially and environmentally related projects are funded by mainstream investors committed to sustainable projects,” states the report.

The IIAC report calls the growth of the global green market “impressive.”

In 2017, US$156.9 billion in global green bonds were issued — more than 1,500 green bond issues in total.

The full-year tally of issuance for 2017 was a record, representing an 80 percent increase compared to 2016, according to the Climate Bonds Initiative (CBI).

According to CBI, the largest Canadian issuers of green bonds in 2017 included the provinces of Quebec and Ontario, Export Development Canada, the City of Ottawa, TD Bank and CoPower, an online marketplace for investing in clean energy infrastructure ◊