Clearer metrics are needed to assess green bond authenticity

Investors seeking more than just financial return face the risk to issue  bonds that are green in the name only

According to Financial Time, “the green bond market is growing faster that ever, and companies and government have borrowed more than $100bn so far this year”. 

However, only a third of green bond issued in the past three years met their “three-stage criteria for sustainable issuance”.

The world is moving towards a low-carbon economy, but the lack of agreed standards, not complete reporting and weak commitments are raising concerns among those interested in investing for more than financial return. 

Inadequate reporting examples can be found across all sectors. 

For example, Real estate green investments lack communication on how bond proceeds will be used and the forecasted energy savings. 

Indeed, details on how proceeds from green bond are used should be the minimum requirement but they are rarely provided. 

So, without clear, comparable metrics, how can investors and assets managers assess the impact of green bond holdings and present to clients truly green bonds portfolio? 

Of course, very good reporting also exists, especially in alternative sectors such as telecommunications. Sovereign green issuance is another positive examples, such as Netherlands issuing green bonds that shows serious commitment on renewable energy and transparency on proceeds investment. 

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