Growth in ESG bond indices

Why ESG?

Sustainable investment has had a large impact on companies over the years, encouraging them to act responsibly in terms of ESG considerations. One of the resulting products is ESG bonds, which encourage investment based on ESG standards and sustainability-specific project-based ideas. Investors were especially financially rewarded for their investments in businesses that included ESG in their financial instruments. Since the European Investment Bank issued these bonds in 2007, the market has experienced only expansion. The move towards carbon neutrality, electric vehicles, gender equality and other issues has contributed to the recent increase in popularity of these bonds.

What are ESG bonds?

A range of entities, including sovereigns, financial institutions/banks, non-financial corporates and supranational bodies have been the main issuers of ESG bonds, in their own or different currencies. The issuance procedure is identical to the current bond issuance method; this starts with hiring banks and underwriters, followed by the announcement of the bond, initial price guidance, invitations for bids, final price guidance and bond pricing.

The four types of ESG bonds:

1. Green bonds: Bonds specifically issued to finance environmentally friendly initiatives such as wastewater treatment, sustainable water use, carbon neutrality and clean transportation. These securities have historically been the largest contributor to all green, social, sustainability and sustainability-linked (GSSS) bonds

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/