Three steps to improve the green bond market (Aviva)

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by Colin Purdie, Chief Investment Officer, Credit at Aviva

Green bonds can be a powerful tool for attracting investment in environmental projects, but reforms are needed to promote further growth of the market, argues Colin Purdie.

- Promotion -

Where the world’s biggest pension fund leads, others follow. So global markets paid close attention when Hiro Mizuno, chief investment officer of Japan’s US$1.4 trillion Government Pension Investment Fund (GPIF), expressed scepticism about green bonds. In an interview with the Financial Times in early July, Mizuno said without key reforms the asset class risks becoming “a passing fad”.

On the face of it, green bonds – debt instruments designed to raise capital for specific, environmentally friendly projects – look like much more than a fad. Since the first green bonds were issued by the World Bank in the late 2000s, the market has grown exponentially. According to estimates from the Climate Bonds Initiative, a not-for-profit organisation, total issuance in 2019 is likely to hit US$250 billion, up from US$3.5 billion in 2012.

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