Green Bonds Add to $5.7 Trillion Privately Invested in the Green Economy
SAINT AUGUSTINE, Fla., September 2, 2014 /3BL Media/ - The first two quarters of 2014 show the Green Transition Scoreboard® (GTS) at $5.7 trillion in private investments and commitments since 2007. This confirms the green economy is on track to reach $10 trillion in investments by 2020 to effectively scale innovations and reduce costs in green technologies as the world transitions to the Solar Age.
The 2014 mid-year update “Green Bonds Growing Green Infrastructure” focuses on the bond markets’ addition of green, impact and ESG (environmental, social, governance) targeted bond issues. These new bonds provide long-term investment opportunities to pension funds and other institutional investors as global policy makers, corporations and asset managers see demand for investments in infrastructure, environmental, social and human capital being integrated into financial markets. “This update of the Green Transition Scoreboard gives you a ‘one stop reference’ to the dynamic and growing area of Green Bonds, all the latest in a few pages - great job!,” says Peter Lynch, principal, Salem Financial, Inc.
GTS sectors follow substantial capital investments in technologies which Hazel Henderson, GTS founder and president of Ethical Markets, has gained from years of research as a science advisor and which the Ethical Markets Advisory Board expertise indicate are continuing to contribute to the growing green economy worldwide. The GTS tracks Renewable Energy ($2.65 trillion), Energy Efficiency ($1.3 trillion), Green Construction ($576 billion), Water ($527 billion), Green R&D ($378 billion) and Cleantech ($268 billion).
Henderson says of the report, “Our GTS focuses on market-based, private finance, tracking significant growth in green bonds as new financial models emerge to transition away from the distortions, mis-pricing and mal-investments and the influences of incumbent 19th and 20th century fossilized sectors.”
The upward trend reported since 2009 aligns with Ethical Markets’ recommendation to invest at least 10% of institutional portfolios directly in companies driving the global Green Transition. This updates strategic asset allocation models both as opportunities and as risk mitigation. A 2012 report by Mercer suggested 40% of portfolios should be in Green Transition sectors. "Soaring demand for Green Bonds is a clear market signal that global green infrastructure projects are generating a healthy return on investment. The use of debt for sustainable development represents an amazing win-win-win for bond-holders, society, and the planet," says Timothy Nash, director of sustainability research, Ethical Markets.
The GTS definition of 'green' omits nuclear, clean coal, carbon capture & sequestration, and biofuels from feedstock other than saltwater-grown algae. Fossilized sectors now find increasingly stranded assets as both the IMF and World Bank call for full-pricing of pollution, including carbon emissions. As perverse subsidies are targeted and low-carbon regulations are implemented, oil and coal reserves become more costly and harder to exploit. Nanotech, genetic engineering, artificial life-forms and 3D printing are considered on a case by case basis. The GTS omits government and institutional investments.
Green technologies and infrastructure investments are driving innovations in financing toward sustainable real world economies, building on earth systems science and information from satellites tracking conditions on Earth. Companies, organizations and the sources of financial data included in the GTS are screened by rigorous social, environment and ethical standards as well as the latest auditing standards for sustainability, including SASB, ICAEW and others. Data is gathered from green and sustainability indexes, financial media, UN and other international studies, the Climate Bonds Initiative and other highly respected research groups.
Co-Author and Executive Director, Ethical Markets Media
Timothy Jack Nash
Senior Advisor and Director of Sustainability Research, Ethical Markets Media
Founder and President, Ethical Markets Media