The green bond serves the role of an ordinary bond: a loan to finance a project with a promise of future reimbursement, plus interest, for the investor. The key difference is that green bonds fund exclusively sustainable projects. The first green bond was issued in 2007 by the European Investment Bank and since then, investors from all over the world have entered the green bond market. In 2019, a record $257.7 billion of green bonds were issued, indicating a huge 51% growth from the previous year [1]. ‘Renewable Energy’ incorporates the largest sector of green bond projects, entailing decarbonisation of energy sources e.g. establishing solar/wind farms. In 2019 alone, 50,925 GWh of energy was saved, equivalent to 37 million tonnes of CO2 [2].
For example the global tech giant Apple has financed a diverse array of green bond projects, from the installation of 600 solar panel rooftops in Japan to the development of an aluminium alloy made from 100% recycled materials [3]. Another leader in the green bond market is the People’s Bank of China (PBOC). China was ranked as ‘Highly Vulnerable’ in the most recent Environmental Vulnerability Index (EVI) report, suggesting the country stands to benefit considerably from green initiatives [4]. A sustained commitment to green bond issuance could be instrumental in mitigating some of China’s environmental problems. Furthermore, China’s position as the second highest Gross Domestic Product (GDP) nation could send green shockwaves throughout the world, encouraging further positive environmental contributions.
Green bonds mark the beginning of a symbiotic relationship between global organisations and environmental sustainability. From an investor’s perspective, there are no overt financial benefits in choosing a green bond over a regular bond. However, entry into the green bond market can stimulate an increase in shareholder value in the stock market, an effect observed across multiple industries [5]. What’s more, a greener brand image is conducive with the recent surge in green consumer demand, particularly following the outbreak of Covid-19 [6].
The Covid-19 era demands huge infrastructural changes within industries. As they struggle with these unprecedented circumstances, green bonds may prove a restorative measure in more ways than one [6].
Laura is a 21 years old neuroscience graduate and writer from Bath, UK. Lover of languages, animals and nature. She speaks Korean and Spanish and regularly volunteers with rescue animals. She completed an internship as a manuscript editor at the School of Civil and Environmental Engineering, Yonsei University, Seoul. She is a flexitarian and advocate of eco-friendly living, especially advocating creative thinking for ways of enlisting the global population into the climate crisis fight.
