The significant impact of climate and environmental changes across the globe has become increasingly apparent, with the world about to record its warmest five years on record and warnings of a collapse in biodiversity.1 In financial markets, the result has been a corresponding increase in demand for investments that can help fund projects with positive environmental and/or climate benefits.
Green bonds made their first appearance in 2008 with an issue from the World Bank. Since then, growing concerns about greenhouse gas emissions and climate change have prompted a surge in environmental, social and governance (ESG) mandates and an increase in bond issuance to help finance climate-related projects. Green bonds have quickly become common across jurisdictions, industries and currencies. Today, European countries are taking the lead; several major governments, corporates and financial institutions have now issued green bonds, with others potentially to follow.
1 Sources: UN Environment Programme, “How Climate Change is Making Record Breaking Floods the New Normal”, 3 March, 2020, The Nature Conservancy, Financing Nature Report, Closing the Global Biodiversity Financing Gap, 2020.
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