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Green Bonds Flourishing

“Green Bonds” were quite the hit in 2015’s debt capital markets, totaling a record issuance of $59 billion, triple their 2013 value, according to Bloomberg New Energy Finance. Broadly defined, governments, municipalities, corporations, and banks issue green for projects that have an environmental benefit, such as developing electric vehicle charging stations; public green spaces; producing solar panels, energy efficiency retrofits for schools and housing, as well as bicycle paths. Green bond issuance totaled more than $59 billion in 2015, up from $36.6 billion in 2014 and $11 billion in 2013. This large increase reflects not only the environmentally friendly projects that need to be financed but also the demand from investors for this type of investment—demand ranging from institutional investors that may use these securities to help hedge portfolio risks to climate change to individual investors that may want to support a local or regional investment in more sustainable infrastructure.

Of note in the Puget Sound region, Sound Transit issued the world’s largest municipal sale of green bonds to date in August of last year.  The sale of nearly $1 billion of green bonds will help fund voter-approved regional transit projects, including construction of more than 30 miles of light rail extensions.  And in October of last year, the State of Washington sold $53 million of General Obligation Green Bonds.  The State has indicated that proceeds will be used for projects identified as green project categories: 1. Protection of Puget Sound; 2. Habitat Conservation; 3. Energy Efficiency and Conservation; and 4.  Clean Water Projects.   Given the strong growth in green bond financing and investor demand we are likely to see more offerings both locally and globally in the coming years.

To download the Green Bonds Report, click here.

 

John McGarry's picture
, Climate Solutions

John recently moved to Seattle after a 25-year career as an investment banker in New York, Hong Kong, and Chicago.  His most recent role was as a senior banker raising capital for US companies in the Healthcare, Consumer Products, and Retail industries.  John is a partner at Social Venture Partners and currently serves on the environmental new grant committee.  He was a Fellow in the Northwest Conservation Philanthropy Fellowship program in 2015 and is a member of Element 8, a clean-tech angel investor group.  Outside of his environmental pursuits, John has a keen interest in music and the arts.  He is currently chair of the board of trustees of Interlochen Center for the Arts, an arts educational and cultural institution located in Michigan.  John holds an MBA from the University of Chicago and a BA in Economics from Northwestern University. He is an avid cyclist, skier, and hiker.