By Jason Galanis
Green bonds are debt instruments created for projects that seek to remedy environmental problems, such as climate change. They had a prominent emergence in 2014, as they began to take center stage in many markets, and have shown the promise to continue rising and exceed their expectations in 2015.
In 2014, the green bond market tripled to $36.6 billion. Projections from the Climate Bonds Initiative claim the market may surpass $100 billion in 2015. This is in large part due to the emerging interest of corporate powers, such as Toyota and Unilever. Combining with the financial institutions of the market pioneers, the World Bank and the European Investment Bank, this industry promises to see the infusion of corporate funds.
Additionally, a $93 million investment by Thailand’s Bangkchak Petroleum stands as the first green bond placed by an oil company, as they placed the bond in order to advance clean energy technologies.
The growing emergence of corporate interest and money in the green bond market serves an important purpose, as it allows for higher yields than those placed by the multilateral World Bank and European Investment Bank. This makes the marketplace more attractive to investors, who now have the preliminary assurances of these multilateral banks, as well as the emerging interest of global corporate powers.
Last year the multilateral banks accounted for 44% of the market, while corporates made up 38%.
As the growth continues in this industry, it is important to remember that even if the green bond market reaches its annual goal of exceeding $100 billion, it is still only a fraction of the massive global bond market, which registers at $78 trillion.