How To Use Green Bonds for Major Financing

Pixabay, Sasin Tipchai

I met some interesting people a couple of months ago. They told me about bonds and how bonds could finance my green project without taking equity. Seriously?

Living in Canada, I expressed surprise that bonds, let alone “green” ones, were not part of my lexicon. Of course, I’m very familiar with typical funding sources-friends and family, angel investors and venture capital rounds-but bonds were not something I knew much about, and this is coming from someone who worked in private equity financing.

The Green Bond Market

There are a lot of misconceptions about bonds in Canada. They live in oblivion. No one knows how to find them, access them, how to get one or even what to expect from a bond.

The green bond market kicked off in 2007 with the AAA-rate issuance from multilateral institutions, European Investment Bank (EIB) and the World Bank. Unfortunately, while the amounts invested in green bonds continue to grow, often the money is not ultimately invested in green projects and technologies.

In marketing, we call it “green sheen” because so many companies claim to be environmentally friendly to meet the trends, but they are far from having anything green in their products.