Apple Issues $1.5B Green Bond to Spearhead Environmental Efforts
(3BL Media/Justmeans) – Corporate green bonds are a debt taken on by a company to finance environment-friendly projects. The green bond market is still in its infancy. According to Climate Bonds Initiative, the first corporate green bond was issued only in 2013. Since then, a handful of leading companies, such as Bank of America, Toyota and EDF, a French power company, have jumped on to the green bond bandwagon.
Apple has announced its decision to issue its first green bond to the tune of $1.5 billion. This brings into focus the key role that this type of investment could play in reining in global warming. With its bond sale, Apple has become the largest American company to have issued a green bond.
Apple’s green bond will fund several initiatives, including the company’s conversion to 100 percent renewable energy, installation of more energy efficient heating and cooling systems, and an increase in the company’s use of biodegradable materials. Apple’s initiative reflects the urgent need for companies to invest in environmental resources in order to protect the sources of their products.
Apple’s vice president of environment, policy and social initiatives, Lisa Jackson, said that the company decided to issue its green bond after December’s UN Climate Summit in Paris, during which hundreds of companies pledged to fight climate change. As a global company, Apple will need to raise billions of dollars to achieve its ambitious plans to reduce its environmental impact.
Globally, the green bond market is expected to keep growing. According to HSBC, an estimated $55 billion to $80 billion worth of green bonds will be issued around the world in 2016. Toyota’s green bonds, for instance, demonstrate a growing investor interest in fuel efficient transportation. The company has issued two green bonds totaling $3 billion since 2014.
Clinton Moloney, sustainability advisory leader at PricewaterhouseCoopers, said that as the effects of climate change become more devastating and widespread, green bond projects could become more complex. Evaluating these projects needs to be more sophisticated.
To track and understand how the green bond money is spent, the International Market Association, which has worked with investment banks and firms such as JPMorgan Chase, BlackRock and World Bank, has created a set of guidelines called the Green Bond Principles. The guidelines define the types of environmental benefits that could be covered by a green bond, such as reducing pollution or conserving wildlife. They also recommend an annual reporting by the bond issuers on how they use the proceeds.
Source: The Guardian