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As governments and organisations increasingly recognise the impact of human activities on global warming, it has become imperative to prioritise climate concerns and address the climate crisis that threatens communities, economies, agriculture, food, and water supply. Addressing this challenge requires substantial financing, which led to the creation of a new class of securities that are credible and attractive to both institutional investors and environmental organisations.
29 November 24
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The steps taken by a group of pension funds in late 2007 to invest in climate-related projects gave rise to the idea of Green Bonds. In November 2008, the World Bank pioneered the issuance of Green Bonds by raising funds from fixed-income investors to support lending for eligible climate-focused projects. This initiative was followed by the International Finance Corporation’s inaugural Green Bonds issued in 2010, in response to investors’ demand for climate-related fixed-income investments. Since then, the growth of Green Bonds has been exponential, demonstrating its robustness, durability, and scalability for diverse market players globally.
Despite this progress, the climate crisis persists because the global community has yet to fully align on the steps necessary for its mitigation. Global effort is required to transform energy, manufacturing, transport, food, agriculture, and forestry systems to stabilise global temperatures. Notably, a significant milestone was achieved in December 2015 with the adoption of the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement (Paris Agreement). This aligns with the United Nations’ Sustainable Development Goal (SDG) No 13, which encourages goals, projects, and initiatives aimed at environmental sustainability.
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Contributor
Ofure Odia – Associate