So-called green bonds have become increasingly popular in recent years, and this rapidly growing segment of the global bond market of $ 128.3 trillion could continue to grow.
When an issuer sells a green bond, it makes a non-binding commitment to earmark the sales proceeds for environmentally friendly projects. This can include renewable energy projects, building energy efficient buildings, or investing in clean water or transportation.
Green bonds fall under the broader umbrella of sustainable bonds, which include fixed income instruments, the proceeds of which are used for social or sustainability projects.
Big names like Apple and PepsiCo dive into this space. A handful of massive banks and governments around the world are also issuing sustainable bonds, including China, Russia, and the European Union.
This can contribute to the rapid growth of the room. According to a report by Moody’s, new sustainable bond issuance could exceed $ 650 billion in 2021. That would mean a jump of 32% compared to 2020.
Watch the video above to learn more about how green bonds work, how issuers can be held accountable, and how green bonds can move capital towards more climate-friendly projects and goals.