Financial And Environmental Performance Of Green Bonds

moderator
By moderator August 2, 2019 13:01

Green bonds?

A bond is a debt instrument using which an entity raises money from the investors. The bond issuer gets the capital while in return the investors receive fixed income in the form of interest. When the bond matures, the money is to be repaid.

Similarly, Green bonds are also debt instruments but specifically used to fund green projects such as renewable energy, emission reductions, climate-friendly projects, etc.

Assessment of Green bonds:

According to a new study published in the National Bureau of Economic Research, the use of Green bonds has been beneficial

Financial benefits:

In the long run, companies get benefitted in terms of better returns on assets and equity.

Environmental outcomes were better: there was a significant reduction in CO2 emissions and consequently, it has increased the environmental rating of companies issuing it.

Globally, Use of Green bonds have significantly increased from $1 billion in 2008 to $143 billion in 2018 but most of these green bonds were issued by governments, financial and utility companies.

India and Green Bonds:

Last week Hyderabad-based Greenko group (India’s clean energy producer) has raised $950 million which is one of the largest oversea bonds raised by an Indian company.

India stands as one of the fastest-growing green bond market in Asia which accounts for ($5.2 billion in 2018) which is way less when compared to the top three countries dominating the Green bond market namely China($83 billion) , United States ($58 billion), France ($57 billion) .

Way forward

As per the new study, lack of uniform standards to classify green bonds and the absence of any regulatory body to regulate green bond market has been the reason for a slow kick start of green bonds market in India. Addressing this is critical for the growth of green bond markets in India.

 

moderator
By moderator August 2, 2019 13:01