(Bloomberg) — The green bond market needs stronger
standards defining what projects qualify as environmentally
friendly investments, said the head of the Goldman Sachs Group
Inc. group that monitors the sector.
Kyung-Ah Park, who leads the bank’s environmental markets
group, said investors are reassured by the green bond label but
often don’t know exactly what they’re getting, much as grocery
shoppers gravitate toward food labeled organic even if they
don’t know why it qualifies.
“The green-bond label provides them with some immediate
level of comfort,” Park said at the Bloomberg New Energy
Finance conference in New York on Wednesday. “We need to drive
the market to get investors comfortable with the overall quality
of green bonds.”
The market has issued $80 billion of securities since 2010
and is forecast to grow by the same amount this year, according
to a Bloomberg Intelligence research note released Friday.
As more green-bond-backed projects proliferate, investors
will seek more details about what underpins the quality of the
bond, she said.
“Greater deployment and greater visible cash flow means we
have many more financial tools in our toolbox that we can open
up to clean-energy companies,” Park said. “As this market
evolves, investors will become more sophisticated and will
require more definition of what green is.”
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