Green Bonds Surge…to 0.2% of Global Market
Financial institutions like Morgan Stanley and Bank of America are leading a surge in green bonds, Bloomberg reports, with more than $16 billion issued so far this year to follow $32.6 billion in 2014.
“What is called clean or alternative energy now is just going to be called energy in the future, and we want to be a part of that,” said Calvert Investments money manager Matthew Duch. “The bonds are attractive and you get to be a part of progress.”
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Morgan Stanley will use $500 million in green bond investment to fund wind farms and solar installations, while Bank of America will invest $600 million in energy efficiency and renewable power projects.
But although they’re growing fast, green bonds still represent only one-fifth of 1% of the global bond market. “Some issuers have embraced it, others are slowly jumping on, and others haven’t gotten there yet,” said Caroline Cruickshank of Bank of New York Mellon, partly because there is still no legal definition of a green bond.
Standardization of those criteria, plus the participation of utility bond issuers, will be likely factors driving future growth, said Bloomberg Intelligence analyst Elchin Mammadov.