Nowadays it seems that everyone wants to “go green,” but did you know that this eco-conscious initiative can be applied to investments as well? The person who invests in green bonds can do good not only for their finances, but for a “green” company as well. So it turns out that going green may help you make some green, too. Excuse the pun, but let’s take a closer look at these green bonds and what they’re all about.
Definition of a Green Bond
In its essence, a green bond is the shorthand term for a Qualified Green Building and Sustainable Design Project Bond. These bonds are given out by organizations that work to promote and help under-used, under-developed, and sometimes abandoned sites (these are also known as brownfield sites.) Plus, green bonds are tax-exempt. They are called green bonds because they promote the initiative of eco-friendliness, and do not have a high environmental cost. Of course, you should do your research before investing in these kinds of bonds, but we will tell you that in order for the organization to be involved in a brownfield site, they need to have LEED certification, funding from the government that totals at least $5 million, and a project site that spans at least 20 acres.
Green Bonds Around the Globe
As you might expect, these types of investments are becoming more and more popular all over the world, and it can be helpful to see how these bonds are growing internationally. In terms of fast-growing markets, South America (especially Brazil) and Southeast Asia, China, and India, are some of the markets to watch. Even so, back in your own country, you may find certain green bond issuers trying to reach a wide range of investors. They do this by pushing their eco-friendly projects and explaining the benefits of these types of bonds. By touting the sustainability of these investments, companies can make a larger name for themselves while pushing their projects and designs. The World Bank’s Bond Program is one such example of this.
Is It the Right Choice for You?
All in all, most of the time a green bond is pursued by bond managers, although in some nations it is more common to see individuals investing in green bonds. Even so, the majority of investors who go for green bonds are institutional, although we are seeing so much growth that perhaps more individuals will be open to these investments. Furthermore, as word gets out that these type of bonds are actually not that high-risk, we might see more companies and corporations going for them. Now that climate change and the environmental crisis is no longer some strange science-fiction theory, green bonds may become a more popular topic of financial conversation.