What are ‘Green’ and ‘Climate’ bonds?

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On the font page of the climate Bonds website you will find an piece of good news that is nothing short of earth-shattering:
Climate Bonds Initiative is an international, investor-focused not-for-profit. We’re the only organisation working solely on mobilising the $100 trillion bond market for climate change solutions.

But what are Climate Bonds (a.k.a. ‘Green Bonds’)?

According to Wikipedia:
Climate bonds (also known as green bonds) are fixed-income financial instruments (bonds) linked in some way to climate change solutions.”


Sounds good, doesn’t it? But the Wikipedia article warns of some of the not-so ethical characteristics of some green/climate bonds:

Criticism and controversies

The green bond market has attracted international criticism with some questioning the green credentials of certain bonds.[19] This criticism pertains both to the projects that are funded, as well as the sustainability credentials of the issuers. In May 2017, the Climate Bonds Initiative refused to list a “green” bond issued by Repsol. The bonds proceeds would be allocated to initiatives meant to improve the efficiency of the company’s oil and gas production operations.[20] The NGO argued that – even though the projects would reduce CO2 emissions – the company’s sustainability strategy did not go far enough from an environmental perspective to classify it as green. This criticism was extended to Vigeo Eiris, the ratings agency which certified the Repsol bond’s green credentials.[21] In 2016, Vigeo Eiris was involved in another green bond controversy. The ratings agency was targeted by Western Sahara Resource Watch, an NGO backed by a Norwegian trade union, after it certified a green bond that would fund the production of solar projects by a Moroccan government agency in the illegally occupied territory of Western Sahara.[22]

This serves as a warning as to the many reasons for researching the background and pedigree of any Ethical, Sustainable or Green investment, before committing our cash to it. While the returns may be all that was promised, the impacts of funded projects could have unintended and unwanted consequences, from the point of view of the Ethical Investor, in terms of their environmental, social and cruelty impacts.

While we list Vigeo Eiris as one of the Screening agencies on our website, we point to the Disclaimer on our homepage, and reiterate that we can only go by what we read and find online, the responsibility for digging deeper is the website visitor’s. After all, we are a signposting site,we sell nothing and take no money for including organisations in our Directory. In fact, we positively encourage people and companies to report to us any abuses, discrepancies and contradictions between the claims of companies we list and their actual conduct, ‘on the coalface’, so to speak.

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