With little hope for meaningful near-term legislative action to drive national shifts in energy and resource consumption to tackle climate change, energy efficiency offers an impactful avenue for climate mitigation. But the enabling technologies often require capital investment that are hard to justify in constrained corporate budgets. As a result, a growing number of major banking institutions are making new commitments to financing projects with direct climate impacts, including those that deliver results via energy efficiency.
A recent GreenBiz article highlighted Citi’s updated climate and sustainability commitment of $100 billion to “lending, investing and facilitating” conservation and efficiency projects. Expanding on its 2007 $50 billion commitment focused on alternative and clean energy technologies, Citi has recognized the need for transparency and guidelines alongside the funding to ensure that the investments result in the kind of sustainable and climate change benefits intended. Citi, Bank of America Merrill Lynch, Crédit Agricole Corporate and Investment Banking, and JPMorgan Chase made up the drafting committee for the Green Bond Principals, which were released in January 2013.
Anne Paugam, CEO of the French Development Agency (AFD) recently published an article discussing the importance of transparency and accountability in Green Bond issuance as a model for success. “These instruments have all the characteristics of conventional bonds, but they are backed by investments that contribute to sustainable development or the fight against climate change … In September, the AFD issued €1 billion ($1.2 billion) in climate bonds, with one goal being to contribute to the development of concrete quality standards.”
The World Bank is also on board, and looking to shape investments that fuel sustainability, tackle climate change, and generate strong financial returns. According to a recent article in Barrons, the World Bank has sold more than $7 billion green bonds since 2008, and now officials hope to create a market for green growth bonds, starting with clients in Hong Kong and Singapore. The World Bank says it is aiming for $225 million in bond sales in the next 6 months.
Green bonds, if offered with transparency and accountability, represent an important source of financing to expand energy efficiency investments and generate large-scale improvements that will have direct and quantifiable climate change and sustainability impacts.
Tags: Building Innovations, Energy Efficiency, Energy Efficient Buildings, Finance & Investing
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