Jul 17, 2017
Countries, local governments and companies are more able to raise debt in the capital markets to finance environmental and sustainability projects than ever before, according to J.P. Morgan Head of Green Bonds Marilyn Ceci, who currently serves as deputy chair of the Executive Committee which oversees the Green Bond Principles. The firm is one of the original co-authors and signatories to these Principles which establish guidelines for best practices for the issuance of green bonds.
Green bonds are aimed at attracting investors who are not only looking for returns, but are interested in protecting our natural resources. “They want to have a positive impact,” Ceci said.
The issuance of green bonds has ballooned to $87.7 billion in 2016 from the $500 million first benchmark green bond issued in 2012, with corporates accounting for nearly 70%. This year, green bond sales are approaching $50 billion, Ceci said. The market is constantly hitting new milestones. The first sovereign green bond was issued in late 2016. The offering was followed earlier this year by France’s €7 billion green bond sale, the largest to date.
J.P. Morgan consistently has been a leader in the sector. In 2016, the bank underwrote more than $5 billion of green, social and sustainability bonds for municipal, corporate and multilateral issuers.
The Green Bond Principles identify a broad list of eligible project categories, Ceci said. To attract investors, issuers have to provide integrity through transparency, reporting and disclosure, including annual reports on the use of proceeds. They should also provide a narrative of their overall environmental strategy and how eligible green projects align with this.
Investors’ interest about the environment is extending into other socially prominent areas, such as bonds aimed at financing low income housing, and educational opportunities for youth and women-owned business, according to Ceci.