Green bonds have been growing in popularity: a market proxy was valued at $372 billion last December. Alternative energy accounts for the largest share, followed by green building and sustainable transport. A new innovation is transition bonds, which fund the movement toward greener projects (though not always those that are best in class). Another innovation is target-linked bonds, which link their coupon to the achievement of specific goals. One such bond is tied to increasing the population of the endangered black rhino. Aside from green bonds, there has been considerable growth in a similar investment type, ESG-linked loans.
- The green-bond market is now full of sub-field aimed at various targets with an environmental or social focus.
- While the first were aimed at sustainable energy only, now the field covers a wide variety of green initiatives.
- Read on about more innovations and new developments in the green bond market.
“In the last five years, we have seen shifts in the types of projects financed”