Green Bond Evaluation: Does it Boost Investor Confidence and Energy Efficiency Visibility?
Ken Locklin of Impax Asset Management moderated a panel on the impact of green bond evaluation on market expectations, projections and investor interest including input from Justine Leigh-Bell of the Climate Bonds Initiative; Mike Eckhart of the Citigroup; Ben Hulac of E&E News; Rod Richardson of the Grace Richardson Fund; and Henry Shilling of Moody’s Investors Service.
Panelists agreed that interest in the Green Bond market is climbing with Moody’s forecasting issuances to cross $200 billion this year, though still a small sliver of the world debt market. The panel also discussed the importance of having a standardized model for evaluating Green Bonds to create clarity and consistency throughout the market for investors.
Evaluation of Green Bonds can come in many different forms, from the Green Bond Principles that set best practices and are internationally recognized to the Alliance to Save Energy’s CarbonCount® scoring tool that specifically determines the carbon emission savings per $1000 of investment. While being labeled “green” doesn’t impact the initial price of the bond when issued, as Citigroup’s Mike Eckhart informs the group, a price uptick can be seen in the secondary market.
In addition, the group heard about the new idea of creating clean tax cuts to reduce the cost of capital for projects financed by Green Bonds from Rod Richardson of the Grace Richardson Fund.
Finally, when asked about the potential for Green Bonds to support the development of infrastructure, there was a resounding “Yes!” that the potential is huge and already being used around the world. In the U.S. municipalities are one of the largest issuers, taking the Green Bond market by storm.