Green Bond Giant Awakened by Countries Spending to Save Climate

Governments spending to avert climate change have stirred a green bond giant inside the global sovereign debt pool worth trillions of dollars.

Nine nations in 2017 are expected to issue securities that help them meet climate pledges, according to Climate Bond Initiative Chief Executive Officer Sean Kidney. Government infrastructure projects supporting renewable energy, clean transportation and sustainable agriculture are among the sectors countries could finance with green bonds, which until recently have been the domain of private companies and multilateral development banks.

“It’ll be a political decision about communicating commitment to COP21 by being very public about how you’re funding, as well as doing what you say you were going to do,” according to Jonathan Weinberger, global head of capital markets engineering at Societe Generale SA. “What drives this is the broad program to call attention to the importance of the topic and the work that’s being done.”

The Paris accord — which is estimated to need $16.5 trillion for full implementation — was widely discussed at the World Economic Forum this week in Davos, Switzerland, where polls showed global leaders were more worried about the kinds of extreme weather triggered by global warming than any other risk.

Green bonds could be a way to future-proof environmental policies and plans, according to Kidney. Cash raised must be allocated to projects that meet predetermined requirements and solidify climate pledges, although the green bond market has previously seen some controversy when corporations have used the funds for ventures that environmentalists have not considered green enough.

Chinese President Xi Jinping on Tuesday urged U.S. counterpart Donald Trump to stick by the Paris agreement and said that China’s green investments are already “paying off.” Chinese companies sold the most green bonds last year, totaling $33.6 billion, according to HSBC. The central government in Beijing is also said to be considering an issue.

“We know that China’s been looking at it,” Kidney said “If they do something, it’ll be very big.”

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