WBCSD and Climate Bonds Initiative launch strategic partnership
The World Business Council for Sustainable Development and the Climate Bonds Initiative will work together to drive the market for corporate green bonds, after entering into an agreement to advance the transition to a low-carbon economy through investment in sustainable finance.
“COP21 showed that both business and governments are eager to deliver the low-carbon economy we urgently need,” Peter Bakker, President & CEO of the World Business Council for Sustainable Development “(WBCSD) told Development Finance. “Bonds have traditionally been a successful method of funding long-term infrastructure projects–?and now, the goal is to develop the green bond market in order to shift much of that investment into infrastructure that is low-emission and climate-resilient.?” Despite a renewed commitment at COP21 in Paris last year, the corporate green bond market remains relatively small. In 2015, corporates issued US$13.6 billion compared to overall green bond issuance of approximately US$41.8 billion during the same year. However, since 2007 the overall green bond market has yielded a compound annual growth rate of 50 percent, proving that green bonds ??can be a suitable capital intermediary between environmental projects and investors. The participation of the finance sector is seen as being a critical element in achieving scale within the market and in addressing environmental challenges within the timeframe set by the Paris Agreement, in which 195 countries adopted the first-ever universal, legally binding global climate deal. “Business leaders who want sustainable outcomes and climate action are looking for positive models that help build green and climate based investments,” said Sean Kidney, Co-founder and CEO, Climate Bonds Initiative. “Joint activities with the WBSCD enlarges the space for business to support scaling up green bond investment and markets as one of those positive models. The Post COP21 challenge is to now increase corporate awareness and use of green bonds and their linkages to the objectives in INDCs (Intended Nationally Determined Contributions) and country climate plans.” The development of robust, liquid, and transparent green bond markets is also seen as an important step in driving down the cost of capital for low-carbon projects across both established and emerging economies.
By Adam Pitt
Photo: WBCSD